Daljeet Kohli has to be credited with being the first to spot the potential of Shilpa Medicare. On 25th March 2014, when Shilpa was quoting at Rs. 348, Daljeet recommended a “strong buy“ on the logic that the stock enjoyed multiple triggers including the much awaited permission from the US FDA. Daljeet confidently predicted a target price of Rs. 544, which was an upside of 50% from the then prevailing price.
However, surprisingly, even though Shilpa Medicare played out as per plan, Daljeet lost his nerve in November 2014 and downgraded the stock to ‘hold’ on the logic that its valuations were “expensive”.
Luckily, Raamdeo Agrawal & Motilal Oswal’s Wealth Creation Study picked up the gauntlet and recommended Shilpa Medicare as a potential ‘100-bagger stock’ owing to the competence of its management and the robust business model.
Manish Bhandari of Vallum Capital was next in line. In January 2015, he recommended Shilpa Medicare on the logic that it has “good management with huge scale of opportunity”. He explained that Shilpa Medicare’s story has “just started” and that it has a “very long journey” to traverse.
All these predictions are coming true slowly but steadily.
Shilpa Medicare surged 20% today to rest at Rs. 1078. The gain, since Daljeet’s first recommendation on 25.03.2014, is nearly 200%.
The best part is that it may still not be too late to tuck into the stock.
CA Rudramurthy BV of Vachana Investments is the latest stock picker to join the Shilpa Medicare bandwagon. In an interview to CNBC-TV18 a few days ago, he pointed out that Shilpa Medicare’s sales for the last ten years have been growing at a CAGR of about 40 percent and that it has an excellent ROI and ROE in excess of 30-35 percent. He emphasized that the stock is reasonably valued because it is quoting at a trailing PE of around 30-35 times and a forward PE of about 25 times.
CA Rudramurthy also pointed out that Shilpa Medicare would receive the US FDA approvals by the end of 2016 and that this would cause its top line and bottom line to surge.
Shilpa Medicare is a “very attractive buy” and it can “at least double from current level from a two to three years perspective” Rudramurthy said confidently.
So, it does look like we will have to keep a hawk eye on Shilpa Medicare.