Saurabh Mukherjea of Ambit appears to have a strong contrarian streak in him and it is paying him rich dividends.
TVS Motors, for instance, is a good example of a contrarian pick. Saurabh recommended the stock when it was totally out of favour. Today, there is a 350%+ gain staring at us.
Motilal Oswal Financial Services is another example. Nobody in his right mind would have thought of buying a brokerage stock at the time Saurabh put a buy on it. Today, there is a 130% gain in the stock.
Saurabh Mukherjea is also the co-author of the 10-Bagger Stocks Model Portfolio which has identified several winner stocks, which are not so popular today.
Also, at the time when there was great uncertanity whether NAMO would come to power, Saurabh had recommended infra stocks like Sadbhav Engineering, Sobha Developers, Ashoka Buildcon, etc, each of which has gone on to give hefty returns.
So, we need to pay attention to Saurabh Mukherjea’s advice.
(i) Crises overblown as less than 15% of IPCA’s revenue comes from the USA:
Saurabh suggested that the crisis was exaggerated. He pointed out that less than 15% of IPCA’s revenues come from America and that its main revenue was from India and exports to emerging markets. “It is not like a Ranbaxy situation where the company is heavily dependent on the US” he said.
(ii) Management serious about resolving the crises ASAP:
Saurabh was appreciative of the pro-active stand of IPCA’s management of voluntarily suspending exports instead of waiting for a formal warning from the FDA. This suggested that they were very serious about resolving the crises.
(iii) Good track record, compounding machine:
The third point that appealed to Saurabh is that fact that IPCA has a long track record of successful operations. “It is a 10-20 years compounder” he said and added that “at the current valuations I would certainly a buyer of IPCA“.
Motilal Oswal’s view:
Motilal Oswal also released a report today in which they call the FDA issue a “small bump in a structural story”. It points out that IPCA has a great execution track record and that the present crises is a temporary disruption in its growth story. The risk reward ratio favours a buy, the report says.
If you want more inspiration, you can check my piece “Why We Need To Grab A Chunk Of IPCA Labs Now” where I have distilled the advice of several pundits on what to do with the stock.