Thread by @LoneInvesTrader

Here's my next pick - #Kilpest . Cmp:308
It might be a controversial one. But given the updates from the management today, I'm quite hopeful that this will become 2x or 3x from current levels within 2 or 3 yrs.
Do your own research before investing.
Disc: Invested

Agri business continues to perform badly in the last few years.
The Operating profit is declining in the last few years.
Agri business contributes nearly 45% of sales but less than 10 percent of profits per FY20 figures, which comes from other income.

OPM of 3B biotech is over 50% for FY20 pre-covid.
This reflected in the June quarter OPM of 69% due to 3Bs sky rocketing sales.
3B had its on and off years till FY16 post which there is a steady performance by 3B.

Hence the intent of the management to sell of loss making agro business and invest in its cash cow - diagnostics makes perfect sense. Covid-19 gave the opportunity for them to connect multiple customers who can be their customers for their future products.

Also September quarter profits are expected to be better than June and the cash flows in fy21 can be atleast 80crs.
If the management is able to do research and come up with good quality products that has good demand, this can be a great success story in the making.

Let's do numbers being pessimitc.
FY21 non-covid profit of 3B can be 11cr(see historical growth)
FY22 - 14cr.
For FY22 let's assume they assume a risk free return of 6% over the 80cr they accumulated from covid - 5cr.
Total- FY22 annual profit -19cr

Now let's get to stock price
EPS - 19/0.85(outstanding shares after merger)
EPS- 22.35
Companies command a PE of 30-100. Lalpath labs trading at whooping 85 PE
Taking a 25PE FY22 stock price will be around 558 which is over 80% from current levels. Remember I'm being pessimistic

I'm hopeful that they wil perform much better and wil outdo my calculations hence I expect to see it at 3x by FY22
Mangement is good. They are straightforward about the outlook which was reflected recently.
How good are they able to maintain margins along with growth will be key

Here I didnt consider the cash inflow due to sell off of the agro business. As per the outlook, only intellectual assets seems to be sold off while physical assets will be retain. I don't think there will be significant cashflow here,

but considering the smaller size of the company, it might boost the valuations a bit.