Sanjivani Paranteral Ltd. – Changing Business Fortunes, Backed By Technicals

Background: Today the company I am discussing is a very high risk company, has very less promoter holding of around 18.5% and therefore, people with less risk appetite may please move away from this stock story right now. This is not a stock for average risk taker and needs very high risk apetite and therefore, if someone does not have that, one can excuse oneself from this post. Those who decide to read further should ensure that they have nothing to complain about the bumpy rides, if any.

The company: Sanjivani Parenteral is a small (market cap wise not revenue wise though) pharma company that has had an interesting evolution from being a CRAMs player to now a formulations company. Normally, this drastic business model change is always violent for the company’s balance sheet and a lot of them perish during this transformation. Thankfully, this company has managed the transformation extremely well. Though formulations are a high gestation business it has served well for the company as is evident from dramatically improved strong cash flows of the company. Although the OPM are still low because the business is still developing (R&D and brand building), it is showing early signs of uptick. One of the points is that the promoters have a small stake (18.78%) in the business but 1) I am told that promoter’s friend/family has decent stake in the company (via public holding thought cannot be independently verified and therefore, ignored) and 2) this small stake will always keep the option of being taken over open. Furthermore, its important to know that the promoters have actually hiked their stake from 14.64% to current 18.78% in last few years. Though the OPM are slowly picking up the company generates very strong cash flows. Sanjivani has shown good growth in last 2-3 quarters and this growth has come on back of couple of significant developments. Sanjivani recently got a WHO nod for its Dehradun plant (around three quarters back) which manufactures high margin antibiotics. Furthermore, Sanjivani till date has close to 140 registrations and out of that around 60 were received in last three quarters alone therefore, though the topline may seem stagnant for last 2-3 yrs but it is likely to pick up sharply in the coming quarters on back of these extremely significant developments. This is in addition to the WHO approved Navi Mumbai plant. Also, the company is concentrating on increasing exports share in the revenue which is currently at around 10% to high double digits in next few years and this would significantly boost OPM.

Valuations: Sanjivani is currently trading at just 0.25 times sales whereas formulations companies are trading at 5-8 times their revenue and even API companies trade at around 3-5 times sales. Sanjivani is available at 11XFY16 PE and has a very small equity base of around 5.9cr. It has a debt of around 5.45cr. Sanjivani has never diluted its equity and it’s WHO approved plants along with its land assets far exceeds the current market cap. So, at present valuations, an investor would not only get the entire business free but also get it at huge asset discount.

Technicals: This is one of the strongest stock discussed on this blog. The stock has recently broken out of a key multi-year (and last of the many) long term resistance and is now building on its strength. Importantly and significantly, the bigger the resistance the higher the volumes with which it was broken. Now, it is clearly on its way to visit its all time highs of triple digits and I strongly believe that it would eventually break that resistance and will be ready for a huge leg up thereafter.

Clearly, the biggest risk associated with the company is low promoter stake but it also presents a unique opportunity as there could be a faster re-rating if either the promoter increases stake or keeps it unchanged or even decreases its stake because it could make it a real takeover target. Importantly, at the current market cap of just 38cr, the stock is cheaply valued w.r.t its assets and also its peers. Whereas companies like gennex, morepen, syncom forumulations are trading at astronomical valuations of 3-5 times their sales and high double to triple digit PEs, this unknown company i.e. Sanjivani – that generates strong cash flows, have successfully climbed up the value chain (not many small caps can boast this and therefore, management should be applauded for this), has triggers in place for higher growth – is available at just 0.25 times it’s sales and around 11 times FY16 EPS. I strongly believe that the stock could see a strong re-rating on back of its improving fundamental profile which incidentally is backed by extremely strong technical profile.

God Bless !!!

Disclaimer: It is safe to assume that I may have some vested interests in the stock. Also, the above stock view is my personal view in individual capacity. For rest, please look at the About page.


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105 Responses to Sanjivani Paranteral Ltd. – Changing Business Fortunes, Backed By Technicals

  1. Himanshu says:

    Thanks a lot for your new pick and future multibagger candidate..
    Further , I think Gennex and morepen too are turnaround stories with good results in last two qtrs and I believe there current market values and P.E will become cheaper when next results will be announced in coming qtrs/ years . Since u have commented that they are trading at astronomical values , will it be safe to construde that in your view I shall sell morepen and gennex .

  2. Souvik says:

    Thanks sir for your new study.

  3. techiechartist says:

    Wow… beautiful chart !!!

  4. Venu says:

    Hi ACE, Thanks for the new pick.

  5. technicaltrader44_12 says:

    the charts are just too good… resembles mangalam in early 30s… super excited…

  6. Niknike says:

    Aceji , congratulations for publishing the new stock idea. Disclosure : I already hold Sanjivani. I picked this stock after doing an analysis as per your style. I feel honored that I am learning the value investing principles. I am immensely benefiting from ur blog . Thank you for teaching me to grow vegetables (not using the often used term coj I am a vegeterian) rather than doing spoon feeding.

  7. Zubin says:


    Another Great find….always makes us wonder why we are not able to do similar stuff …Hats off to you analysis🙂

    Can you share your views on Digjam Ltd(amalgamated). Is in an opportunity in a distress situation.


  8. keeninvestor says:

    Hi ACE
    In addition to long term debt of 5.4 Cr, tt has short term debt of 50 cr of so. And H1 of FY16 EPS is just 1.8. You expect it to do >3.5 in the next half ? Any insight you can share as to why ?


    • i think you did not take into account rs 1.45 EPS that was done last quarter alone so even if H1 has 1.82rs EPS, last quarter contributed 1.45rs. Plus the growth that is expected to come by should easily do it for the full year and thereafter too. Furthermore, if you see the AR you would know why this short term debt (less than 48cr) is there and furthermore at this stage it is expected and its not a problem at all.

  9. Suneetha says:

    Thanks for this new Gem ! LIFE=RISK ! I love to take risk ! thanks !
    Plz share your view on PI Industires , Cox & kings. thanks in advance !

  10. keeninvestor says:

    Hi ACE
    I take your point about Q2 itself contributing 1.45 EPS. And yes, if they can do 45-50 Cr sales in Q3 and Q4 as well, then yes, we are on for 3.5 EPS in H2 FY 15. My concern is that interest cost is eating up most of the profits – approx 70% of PBIT goes for interest payments. Do you think they can get out of this situation ?

  11. Sumit says:


    • as mentioned numerous times in the past no links. Also, what you presented is an a two year old news and that too against civic body and not about industry in general… i hope you are aware that finally it did not affect any company and was proved baseless.

  12. sridhar says:

    Hi ace , thanks for the great pick . Waiting for pharma stock which is on track and at reasonable valuations for a while. Thank u once again . I think less promoter holding is not risky as long as they don’t do mischievous and business has potential to scale.

  13. Ram says:

    Whole pharma sector is on high gear recently.

  14. naveenagp81 says:

    sir good morning,
    all can buy share no uc it indicates investor are not ready to take high risk

  15. Saurabh Gaur says:

    hi Ace looking the volumes it seems more than 15 percent volumes of the total are traded today . can you comment on it.

  16. Vinisha says:

    Dear Ace do you have a theory/guess as to why Mangalam Drugs is falling like this? Cupid too had fallen badly last December but it was not this kind of a free fall and did not last this long.

  17. Jitendra says:

    Good stock to invest, only concern is the promoters holding. But as the valuation is very very cheap its good to have it in this initial stage to gain huge huge returns.
    Thanks again ACE to share this stock story. God bless you.

  18. Vinay says:

    Hi Ace,
    I tried to find the info about the registrations you mentioned but couldn’t find it anywhere on the website or in AR’s or in news items . Can you tell me where can get this info?
    I also couldn’t find the the business changing from Contract manufacting to API, although on website they have written about doing research, But in last 3 AR’s , nowhere its mentioned about the vision of changing the business to API.

    Thanks and Regards,

    • this is normally the problem with small caps.. one has to dig for information. you can connect with the CS/management to confirm this… also their website has not been updated for last 3 yrs and the content is also not completely updated for last 5 yrs or so i think… therefore, talk to the folks in the company to confirm. also, they are one of the biggest suppliers to indian army and govt. On the website though one can go through a old product list from which you can make out that it has formulations but be informed that now, its almost all forumulations .

      • Vinay says:

        Hi Ace,

        In the story ,You mentioned they got new 60 registrations. I couldn’t see about the any future contracts they are expecting to be granted or they already have which will support the growth in coming qtrs. You mentioned about govt. agencies buying their products but they are their regular customers. I am not able to judge the future growth prospects?

        Thanks and Regards,

        • you can connect with the company to get the number but similar number can be expected in the next few quarters. i think its basics that if you get new registrations one can supply larger amount of medicines to your present customers.. its very simple… also i hope you have started connecting with the company to research more.

          • Vinay says:

            Thanks Ace. Yes, I have started Connecting to CS earlier but they don’t respond to mails and calls generally. Did that for associated stone and deccan gold.
            Anyway, No issues. Will see how it turns up.


  19. Roshan says:

    Hi ace ..are u still positive on dhp for the long term? I’m willing to hold it for very long term..should I go ahead or is there any change in ur opinion as of now?

  20. Vinisha says:

    Rajastan global securities bought two lakh shares of sanjivani today. Looks like they too read your blog😉 Sanjivani will be capped at current levels till the end of this month it appears. Good chance for accumulation. Thanks for the recco.

  21. Navin Sharma says:

    Sir, Do you Like Tube Investment at CMP?

  22. niravkaria says:

    Sir ur views on biopac industries and medicaps limited. Thanks in advance.

  23. Ravinder Reddy says:

    Hi Ace,

    What is your view on panyam cements today’s board meeting?

  24. hafizul09 says:

    Ace ji—-seeing your capability in finding out future Gems and sure shot multibagger , I would humbly request you to open a Mutual Fund and act as an fund manager and I am sure the return should be CAGR 50% +, that is HUGE if we compare with so called top class MFs—–Pls think about it–God Bless U!!!!!!!!

  25. acefollower says:

    What is the significance of meeting dt.29.12.2015 of Panyam board ? How will it impact business of panyam. Please share your view. Regards.

    • what is the confusion there… its all written in the board meeting minutes that are posted on bse

      • sparsh says:

        The board has proposed to issue massive amount of debentures of almost 100 crores. We will assume the management is prudent and in its senses. Hence such amount of capital infusion should mean:
        Company sees a huge market for its product and therefore sees itself supporting and thus sustaining such amount of interest – atleast 12 crores on 100 crores of debt.

        Company has issued warrants to two private institutional investors at market rate. One of them specialises in investing in distressed companies.
        This means Panyam has got a stamp of approval from two big investors in the game. The investors would certainly be aware of the future issue of debentures and would have approved it.

        All this means the company is turning around and has a bright chances in creating wealth.
        What further should be assessed from it Ace? Trying to learn.

  26. Venu says:

    Hi ACE, your views on Adinath Exim Resouces.

  27. Jitendra says:

    What is the financial year considered for 52 week high/low? As per my understanding it is 1st Jan to 31st Dec.
    In that case all the scrips which are at their upper band limit will be opened from 1st Jan 2016.

  28. Jitendra says:

    What is the financial year considered for 52 week high/low? As per my understanding it is 1st Jan to 31st Dec.
    In that case all the scrips which are at their upper band limit will be opened from 1st Jan 2016.

  29. juststartedtolearn says:

    your views winsome textiles pls

  30. Aravind says:

    Hi Ace,
    Bought the stocks today after it was on high yesterday. I read the chillar Annual Report that had no info, so I totally trust you as in above comments you mentioned that you got in touch with mgmt. and also believe that the company is cheap on a sales basis and they are only going to improve. The one +ve is the last quarter earnings that ever better than all prev. I assume your understanding and research to be enough and as I have trust in your judgement I took my position for a medium term, lets follow the results and keep track for a few more quarters.

    Whats your view on the growth from here on if the new permission as you said are on.. CAGR of 30% for a few years? 46.17 Cr. to 100cr M. CAP can I expect in 3yrs

    • You did huge mistake. Please sell your holding and anything that you have bought that was discussed on this blog and you did not research on it. If you are buying anything without researching then its your problem and a recipe for disaster. You should buy/sell the stocks based on your own research and not based on anyone else’s research. You are wrong with your investing decisions if its based on borrowed conviction. I dont do portoflio management and noone should buy/sell stocks based on my advice alone as mentioned earlier on this blog. One should buy/sell only if he himself/herself is convinced. Huge mistake on your part. God help you.

  31. Prasant says:

    Hi Ace,

    Your inputs on Cals refineries.


  32. Namita says:

    Ace, what is your view on virinchi tech?

  33. Leonard Prakash says:

    can i have the URL of the blog please

  34. Ashutosh says:

    Hi Boss,
    Your views on Cerebra Integrated Technologies please..

  35. Yet another interesting pick, Ace! And, any update on the periodic price bands for those securities exclusively listed on the BSE? You said something about the same being reviewed or modified. Got to hear anything about the same?

  36. shreeux says:

    Hi ACE,
    Thanks for the new gem..!!!

  37. SOMEN GHOSH says:

    Ace, I have invested in the following shares:

    From which ones I should exit please recommend?


  38. Shankar says:

    Can you pls share your views on south indian bank and kopran at cmp.

  39. Rohit Gulati says:

    Dear Ace,
    I have been trying to access their website for past couple of days ….but seems it’s not working. Called up the company also….no help.Can you pl. guide.

  40. Jay says:

    HI Ace

    What do you think about today’s 10% correction?

  41. Puru Ji says:

    Thanks Ace….

  42. Rajesh says:

    Dear Aceji
    AR 14-15 Balance sheet shows fixed assest reduction by 12 Cr by transfer/sale.Hoever its cash consideration is not reflected in profit loss Accout.Pl clarify.

  43. Sachin says:

    Dear Ace,

    Do you have any targets in mind for Sanjivani Parental?


  44. amaan says:

    Sir do you advise to stay invested in sanjivani?… I have a time horizon of few years….

  45. piyush Ajmera says:

    Hi Ace , Any Change in view for Sanjeevani . I got it during December . Is it good time to average it out

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