Stock is at 10 year support zone.It's at bottom of a bad business cycle, and on the cusp of a turnaround. These situations offer excellent risk adjusted rewards. A short thread on one such great management - Arun Kumar and Strides Pharma.

1.Arun Kumar is an Indian pharma legend. He uses Strides as an incubator and has spun off many business worth billions of $. Strides has one of the highest ANDA filings in the world. They are a major generics player in US, Europe and Africa, and moving towards complex molecules

2.A confluence of business strategy changes, macro factors and bad luck threw Strides off last year. The US business saw massive price erosion. One of their biggest molecules Ranitidine was banned in the US. The war disrupted supply chains. The stock has crashed to 10yr lows

3.After years of investments, their world class Biopharma CDMO subsidiary Stelis finally started commercial operations with the Russian covid vaccine. Then the war happened + vaccine demand reduced, and they are stuck with inventory, further hampering cash flows.

4.Arun Kumar returned as full time CEO, focusing on network optimization and cost reduction. Q2FY23 was the best ever quarter for the US business at $60m revenues. They are to receive around 600cr Arrotex (an earlier sale) this month. No more investments in Stelis from Strides.

5.Strides guides net debt to be at 1000cr by FY23 (over 3000cr now). Reducing price erosion and operational efficiencies means high odds of the guidance playing out. Last week a US court dismissed the evidence that ranitidine causes cancer. Strides may be able to relaunch too.

6.Possible upside?
At 3200cr mcap, it is available at 0.9 times sales (10 yr average is about 2.5). Barring any more bad luck, they should get to 500+cr operational cash flow in FY24. At 15-20 times long term average multiple, could trade at 7.5-10kcr mcap. Plus Stelis free.

7.Summary of thesis:
- Management ability top notch
- Coming out of a rare situation where everything went wrong
- Strengthening core business and huge optionality with Stelis
- Debt reduction and improving cash flows to hit books soon
- Throw away starting valuations

Risks:
- Continued price erosion
- Debt reduction not playing out
- No liquidation of Russian vaccine

We track developments closely and believe there can be swift and sharp returns. But with high debt, this is risky.
If things doesn't pan out then we may sell anytime.Please do own due diligence

NiftyIT after recent rally is now at pivot support and fibo zone,looks good for low risk entry.Keep an eye on IT stocks as offering favourable RR
#LiveMarketUpdate

Shared one of our premium group picks here free to all of you #Spic. Did you pick it up. It's roaring✔️✔️

Expect lot of news coming in next 6-18 months

SIP stocks for New Year special to accumulate on dips:💥
📌CAMS (cmp 2202,support 2100-2000-1700)
📌Jubilant Food (cmp 521,support 460-390)
📌Godrej Properties (cmp 1250,support 1150-1050-950)
📌IRCTC (cmp 650,support 570-510-450)
📌Tata Elxsi (cmp 6030,support 5600-5200-4700)

PLEASE NOTE THAT THE ABOVE 5 STOCKS ARE TO ADDED IN SMALL PARTS ON MONTHLY SIP BASIS ON DIPS FOR NEXT 12-18 MONTHS.✔️✔️
Use the support levels for reference in market dips.Check after 2-3 years and thank us😃💖

We are adding two sectors from today using this dip,both given healthy correction after the big run up.Selectively good opportunities available at lucrative zones for positional view and budget rally🎯🎯✔️✔️

Indian markets now😀