Alpha Ideas 20-20: Here’s Why Maximal Capital’s Sarvesh Gupta Likes Unichem
Unichem Laboratories Ltd. is one of the cheapest pharmaceutical sector stocks with a good management track record, according to Sarvesh Gupta, founder of Maximal Capital.
The company is an international, integrated and specialty pharmaceutical company, Gupta said at the Alpha Ideas 20-20 conference in Mumbai on July 27. It makes and markets a large basket of pharmaceutical formulations as branded generics and generics across the world, he said. The company, according to Gupta, is focusing on the international market after it sold its domestic formulations unit to Torrent Pharmaceuticals Ltd. in December 2017.
Unichem is in a “high-growth situation” with its operating profit already at break-even levels, he said. The company is cash rich, with cash comprising nearly 70 percent of its market value, he said. “Margin should improve sharply with rising revenues in its U.S. business.”
- Possible slowing of business or growth in U.S.
- Corporate governance issues relating to excess cash.
- Asymmetric and unjustified capacity creation without sales catching up.
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