homemarket Newsstocks NewsWhy Saurabh Mukherjea thinks these two diagnostic stocks are little champs— explained
Why Saurabh Mukherjea thinks these two diagnostic stocks are little champs— explained
Saurabh Mukherjea-led Marcellus Investment Managers has Dr Lal Pathlabs in the largecap portfolio. "We doubled that position in the summer of last year," he said in a conversation with CNBC-TV18 today.
Saurabh Mukherjea-led Marcellus Investment Managers has Vijaya Diagnostics and Metropolis Healthcare in their little champs portfolio, which focuses on investing in quality midcap and smallcap companies for a long term.
The portfolio management services (PMS) provider also has Dr Lal Pathlabs in the largecap portfolio. "We doubled that position in the summer of last year," Mukherjea said in an exclusive conversation with CNBC-TV18 on Tuesday (August 29).
"The reason for building these positions was we thought last year the market got it wrong in terms of the notion that there is disruption in the pathlab space. I think the private equity and VC driven players are by and large gone; the money has run out. We do not see the challenges being particularly credible, and therefore Dr Lal in north and east, Metropolis in western India and Vijaya Diagnostics down south; we reckon it as the best placed player," he noted.
Mukherjea said that ex-Covid revenue growth is largely recovering to the levels it was in 2019. "Margins we reckon will recover; pricing power is coming back to the leaders. It's a $10 billion industry, barely $2 billion is in the hands of the organised players. So massive scope for formalisation."
He further said, "Operating margins for these players are higher today than they were before Covid. Obviously during Covid the operating margins went through the roof, courtesy RT PCR. But if we strip out the Covid years, operating margins today are higher than they were before Covid.”
He added that all these of these companies — Dr Lal Pathlabs, Vijaya Diagnostics and Metropolis Healthcare — are generating cash flow.
Diagnostics stocks performance
Shares of Dr Lal PathLabs Ltd were trading 0.54 percent lower at Rs 2,174.90 apiece on the NSE in Tuesday's late afternoon deals. In the last one year, the stock has tumbled 16.29 percent while it fell 1.14 percent so far this year.
Vijaya Diagnostic shares were about a percent higher at Rs 500.40 apiece in trade today. On a year-to-date basis, the stock is up 17.12 percent while it rallied 43.19 percent in the last one year.
The stock of Metropolis Healthcare, meanwhile, was up marginally in today's trade. Metropolis shares have fallen 5.35 percent in the last one-year period.
The Little Champs portfolio already has names like GMM Pfaudler, V-Mart, Alkyl Amines, Paushak, Suprajit Engineering, among others.
Overall, Marcellus' Little Champs Portfolio has given lackluster returns to its investors. In fact, its Little Champs Portfolio has been among the worst performers in the last one year, bleeding 12.36 percent of portfolio value. This is against a 12.85 percent gains in BSE 500 index.
(Edited by : C H Unnikrishnan)
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