After disappointing quarters Jagsonpal Pharmaceuticals Limited posted is back on growth path. The company has reported quarterly revenue of Rs. 61.4 crores and operational EBITDA of Rs. 10.2 crores for the Q1FY25, which are higher both on QoQ and YoY basis. Net profit is Rs. 5.3 crores due to exceptional expanse of Rs. 3.3 crores incurred on acquisition of Yash Pharma.

Some interesting key points from the press release:

1. The company is on course to deliver 30%+ revenue growth with 20%+ operating margin for the full year which means management guiding revenue of more than Rs. 275 crores ( FY24 revenue Rs. 209 crores) and EBITDA or Rs. 55 crores for FY25 (FY24 EBITDA Rs. 23 crores).
2. Cash position of Rs. 150+ crores by end of the year.
3. Yash Pharma acquisition effective from 1st June 2024.
4. Integrated the business acquired from Yash Pharma into Jagsonpal, and confident of aligning the margins of the acquired business with that of Jagsonpal ahead of schedule.

From the TTM financials, the company seems to be fairly valued, however, if the aggressive growth guidance of the management are met, the stock is available at discount to the peers. Capabilities of CEO Manish Gupta in running the show and clinching acquisition at good prices, who is also holding good amount of stake in the company is another optionality.

Disclaimer: Invested and biased

Thank you @Rajesh_Singh Sir for sharing your knowledge and insights with us. Sir, have you looked into Nirman Agri Genetics? Management is very ambitious and they are looking at 100% CAGR. There’s a lot of buzz regarding it amongst SME investors as well.

I don’t think the results are that great.

1. The operating costs of the company seem out of control. The expense to operating revenue ratio has surged to 1.32 ( 1.28 in Q1-24). The effect is not visible due to high other income on sale of land (2059 lakhs) which is exceptional in nature.

2. Ignoring the impact of exceptional other income, the Loss stands at 2232 lakhs ( 1141 lakhs in Q1-24)
   That is widening of 95% approx.

3. The revenue of Foundry business has taken a hit of 18% yoy. No particular reason provided by the management for this variation.

4. Order book of 33,930 lakhs is on hold from customers end. No visibility of materialisation of the same.

Ofcourse the impact of finance cost savings on loan is will be visible from the next quarter.

Inviting everyone’s views on this.

This is a random thought on my musings about why index funds outperform most fund managers and active investors. When I compare index funds with every successful long-term investor, there are three salient features. In fact, the seemingly “dumb” Mr. Index appears to be the smartest of all investors because it doesn’t think and simply follows winning strategies mechanically.

1. Ranking and Sizing:
   Mr. Index always ranks the stocks it holds and allocates based on these rankings. The highest allocation goes to the top-ranked stocks, but it never does equal allocation.

2. Let Winners Run:
   Mr. Index will never reduce its stake in a winning stock, regardless of market conditions or price fluctuations.

3. Quick to Weed Out:
   Mr. Index is emotionless when it comes to removing losers. It completely removes stocks from its portfolio when they fall out of the ranking.

So if you think the only edge an investor can have over an index fund is a better ranking mechanism, remember that it is impossible to be as mechanical as an index fund in other aspects. Ranking stocks is definitely a challenging task, but Mr. Index uses a simple formula based on market capitalization and still outperforms almost everyone.

Thoughts?