Wockhardt is a very old professionally managed company. Over the last 10
years, Sun Pharma, Lupin etc have become very big compared to
Wockhardt. Sun Pharma is 20-25 times bigger and Lupin is 8-9 times
bigger than Wockhardt. The total pharma industry is $975 billion worth and
India holds only 2% value in terms of sales. So there is huge
potential for Indian pharma and furthermore huge potential for Wockhardt. We recommend the script due to following strong reasons:
1. Wockhardt is facing problems with USFDA for import alerts issued to some of its plants which are likely to be resolved within the next 1 year. Therefore, currently it is available at a low price.
2. Before USFDA problems surfaced, Wockhardt was highly bullish and touched Rs 2300-2400 and that was due to increasing earning growth also with Price Earning ratio of less than 15 at that time. Current PE of Sun Pharma is around 25-30 and on earlier profits, Wockhardt PE is is less than 6. It means there is a scope of scripts increasing 5-6 times in price, once USFDA problems are resolved.
3. Wockhardt has come out with two new drugs discovery( not generic ) which has not been achieved by any pharma company in India. This new drug discovery will give huge rewards to shareholders in 3-4 years time when the drugs will hit the world market. It will be a matter of pride for India if that day comes and shareholders can expect PE to hit above 30.
4. USFDA has given fast approval for these two new drugs skipping first two stages and drugs will be tested straight for 3rd stage which is small number of patients world wide. The new drugs may have potential of hitting $2-3 billion in the next 3-5 years time period and it is possible that valuation of Wockhardt will jump by 4 times of new drugs sale of $2-3 billion with these two new drugs alone, Wockhardt market cap can be increased by a whooping Rs. 50,000 crores.
5. Wockhardt management is giving indication of utmost confidence by declaring interim and final dividends even though they are facing problems with USFDA and also buying company shares from the open market.
6. Wockhardt is not affected by the Modi-factor.
There may be short terms hiccups but in the long terms of 5 years, this stock is a real wealth creator.
1. Wockhardt is facing problems with USFDA for import alerts issued to some of its plants which are likely to be resolved within the next 1 year. Therefore, currently it is available at a low price.
2. Before USFDA problems surfaced, Wockhardt was highly bullish and touched Rs 2300-2400 and that was due to increasing earning growth also with Price Earning ratio of less than 15 at that time. Current PE of Sun Pharma is around 25-30 and on earlier profits, Wockhardt PE is is less than 6. It means there is a scope of scripts increasing 5-6 times in price, once USFDA problems are resolved.
3. Wockhardt has come out with two new drugs discovery( not generic ) which has not been achieved by any pharma company in India. This new drug discovery will give huge rewards to shareholders in 3-4 years time when the drugs will hit the world market. It will be a matter of pride for India if that day comes and shareholders can expect PE to hit above 30.
4. USFDA has given fast approval for these two new drugs skipping first two stages and drugs will be tested straight for 3rd stage which is small number of patients world wide. The new drugs may have potential of hitting $2-3 billion in the next 3-5 years time period and it is possible that valuation of Wockhardt will jump by 4 times of new drugs sale of $2-3 billion with these two new drugs alone, Wockhardt market cap can be increased by a whooping Rs. 50,000 crores.
5. Wockhardt management is giving indication of utmost confidence by declaring interim and final dividends even though they are facing problems with USFDA and also buying company shares from the open market.
6. Wockhardt is not affected by the Modi-factor.
There may be short terms hiccups but in the long terms of 5 years, this stock is a real wealth creator.
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