The year 2021 marked record highs in Indian stock markets despite the negative effects of the COVID-19 pandemic. A record number of IPOs were raised while Sensex rallied 20% and Nifty 50 rose by 22%. Riding on the wave of this rally were many multi-bagger penny stocks providing high returns for their shareholders.
Kwality Pharmaceuticals is one such multi-bagger stock that increased in price from Rs. 25.55 on 26 December 2019 to Rs. 768.95 on 14 January 2022 on BSE. With an appreciation of 2900% in two years, it provided stellar returns in just two years.
Now, let us look at the details of this stock.
About the Company- Kwality Pharmaceuticals
Kwality Pharmaceuticals is a prominent manufacturer and supplier of finished pharmaceutical formulations in dosage forms. Its formulations include everything from liquid orals, capsules, tablets, ointments, and ampoules to oncology, eye/ear drops, and COVID-19 medications.
The Amritsar-based pharma company specializes in dealing with customized orders as per requirements. Its products have been registered in different countries of Europe, CIS countries, Asia, Africa, and Central and South America. Kwality Pharmaceuticals is certified as ISO 14001:2004 and ISO 9001:2000 and works according to new GMP, Schedule M and WHO norms.
This company has two manufacturing plants, one in Jassur, Himachal Pradesh, and the other in Amritsar, Punjab. It keeps records of all inputs used in manufacturing as per standards laid down as SOPs (Standard Operating Procedures) and tests finished goods as per SOP before selling. It employed around 496 employees, according to its last annual report in March 2021.
Reasons for This Company’s Stock Price Surge
The exemplary returns offered by the stock can be attributed to its strong financial performance in the last two years. As of FY21, the company saw its net profits rise to Rs. 14.88 crores from Rs. 8.20 crores in the previous financial year, an 81% increase. On a yearly basis, its sales zoomed to Rs. 261.5 crores from Rs. 138.68 crores, an increase of 88.56%.
One of the causes of its profits can be the strong demand for its leading products like Remdesivir. As many doctors prescribed this drug to provide relief to COVID-19 patients, its demand went up, though it was not a proven cure for the virus.
As an exporting company, Kwality Pharmaceuticals has supplied a considerable number of Remdesivir injections to the global market. To keep up with global demand for its popular products during the pandemic, the company has improved its infrastructure.
Moreover, it is currently involved in a Rs. 31 crores research and development project in Punjab to be completed within September 2022.
Share Price History of Kwality Pharmaceuticals
As of 11:39 AM 17 January 2022, this stock was trading at Rs. 775 per share on the BSE, up by 1.49%. In one year (as of 18 January 2021), the stock appreciated 1193.82% from Rs. 61 to Rs. 775, with an all-time high of Rs. 1117. According to this information, if an investor invested Rs. 1 lakh last year, he/she would have got around Rs. 11.94 lakhs.
In the last six months, this stock logged around a 339.09% increase from Rs. 183 apiece to Rs. 775. Its share price decreased by 5.49% in the last month from Rs. 799 to Rs. 775, with an average price of Rs. 840 apiece.
Had an investor invested Rs. 1 lakhs in this stock in July 2021 (6 months ago), his/her investment would be worth Rs. 3.39 lakhs. From its close price around two years ago (26 December 2019), it increased to Rs. 768.95 as of 14 January 2022 on the BSE. As such, an investment of around Rs. 1 lakhs two years ago would be worth Rs. 30 lakhs.
These returns are calculated based on an investment held throughout the stated period.
Kwality Pharmaceuticals has delivered strong growth in net profits over the last five years. Over the last two years, it has generated net cash flow and outperformed its competitors throughout 2021. Additionally, the company’s stock shows opportunities such as the highest recovery from a 52 week low and a high momentum score.
However, the stock also has a few weaknesses, including relatively weak financials and expensive valuations. Investors should always do adequate research and exercise caution before investing in these types of stocks.
Frequently Asked Questions
What are the promoters’ and shareholders’ stakes in Kwality Pharmaceuticals?
Seven promoters held a 54.13% stake in the company as of the June 2021 quarter, while 141 shareholders (public) held a 45.87% stake.
Which big shark investor has recently increased his investment in Kwality Pharmaceuticals?
Ashish Kacholia, a big shark investor, closely tracked by stock market participants, has raised his stake to 1.67% in this stock as of December 2021. The ace investor is renowned for his ability to pick high-quality stocks in the mid-caps and small-caps segment.
How did the small-cap and mid-cap segments perform in 2021?
In 2021, BSE mid-caps and small-caps outperformed both BSE and Nifty 50, increasing by 37% and 58%, respectively.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.