Unichem Labs. (BSE:UNICHEMLAB) is a 74 year-old trusted pharmaceutical firm supplying drugs globally including to important markets like US and Europe. It recently hived off the poorly performing India business at good valuation. This will fund its fledgling US business long cash-starved and where big opportunity awaits. But medium term business uncertainty has driven the stock price down to 8 year lows. Today it sells at just over free cash making its 6 highly prized plants available for free. The CEO (Dr Prakash Mody) has his skin here, owning a majority of it, and having compounded equity at 24% for decades together. Such a track record makes us certain that he is unlikely to do worse than return risk free rate with owner’s equity, over the medium term. Even at that we should see a price 50% above where we bought.
The stock makes part of our investment fund ACATIS India Value Equities (ISIN: DE000A141SG1).
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Photo: Siddharth Mehta-Thomas