Long-term outlook for Wockhardt appears sunny: Nitin Raheja

In a chat with ET Now, Nitin Raheja, Chief Investment Officer, AQF Advisors, shares his views on the huge appreciation Wockhardt stock has seen in the last one month.



ET Now: Wockhardt has appreciated by about 80% plus in last one month.Its market cap has gone up from Rs 4,000 crore to Rs 8,000 crore. For a company which faces a big challenge when it comes to the US regulatory hurdle, what explains the underlying price action? Wockhardt is not moving up on 1000 shares or 2000 shares, yesterday it moved up on 7 million shares. Your take?

Nitin Raheja: The Wockhardt stock had collapsed from a price of around close to Rs 1800 or Rs 1900 all the way down to Rs 350 or Rs 370. It is a fact that markets react both ways. Investors probably thought that the stock could not get any more lower than this, and that the worst was probably over. There were no more plants to come under the FDA scanner. There were no more warning letters that were possible for any of their plants. On top of that, corrective measures had already started. It is a business which is fairly large in size. It was also very well discounted and so, once anybody and everybody who wanted to sell exited, people arrived at the opinion that the worst phase was behind the company, and that the only way it could go from that point was up.

It might take some time but going ahead, we should start seeing more positive news coming. So this probably accounts for the Wockhardt appreciation.