Investing is easy when charts are green. But we have all seen what happens when they are red. Investors become the people on the Titanic trying to save their life. However, it is situations like these that separate the average investors from the super investors of India.
The super investors of India or as we call them the Warren Buffetts of India, don’t buy safety. They buy panic. After all that is what Buffett always said and followed – Be fearful when others are greedy and greedy when others are fearful. And right now, there is one stock that looks absolutely terrifying to the average investor. It has crashed 80% with a series of losses and shrinking sales.
While an average investor might call it a wealth destroyer and look the other way, Market Master and a Warren Buffett of India Vijay Kedia just bought a piece of this company.
The ‘SMILE’ Philosophy: Why Kedia Buys Panic
Vijay Kedia, the man known for spotting multi-baggers before most of his contemporaries, bought a stake in the company. Kedia who currently holds stocks worth over Rs 1,500 cr between his individual portfolio and his company Kedia Securities Private Limited has bought a stake in the company and raised a lot of questions.
The big question is WHY? What does the “Smile” investor see in this struggling company that we are missing? You see, Vijay Kedia doesn’t usually follow the herd. He finds companies that are small, unloved, and often going through a crisis. He calls it his “SMILE” philosophy – small in size, medium in experience, large in aspiration, and possesses extra-large market potential.
And he just found something interesting.
The Trade: Digging Into the Bulk Deal Details
According to the latest bulk deal data from December 29, 2025, his firm, Kedia Securities Pvt Ltd, picked up 1,37,794 shares of Mangalam Drugs and Organics Ltd. He paid around Rs 24 per share, investing roughly Rs 33 lakhs.
Now, Rs 33 lakhs might sound like pocket change for an investor like Kedia. But for a tiny company with a market cap of just Rs 44 Cr, it is a noteworthy addition. He isn’t just testing the waters; he is signalling that he sees a turnaround coming in soon.
Mangalam Drugs: Value Opportunity or Falling Knife?
If you look at the chart for Mangalam Drugs without knowing Kedia bought it, you will close the tab immediately. Almost every investor would. The stock touched a high of Rs 125 about a year ago. However, today, we can say it is scraping the bottom at around Rs 26. It was at Rs 24, and it jumped to Rs 26 after news of Kedia’s stake spread.
Take a look at the chart for the share price of Mangalam Drugs and Organics Ltd for the last few years.
As you can see, this is an 80% wipeout. Usually, stocks fall that much for a reason and Mangalam has plenty of such reasons like shrinking sales, operating losses, and overall losses. But clearly, Kedia probably thinks the punishment is overdone. Immediately after the news broke, the stock locked into an upper circuit. So, the Kedia Effect does work!
The Long Struggle for Sales and Profits
It is imperative that one looks at the core financial figures to get a 360-degree perspective. We are looking at the standalone numbers here to get data for a longer period.
The company’s sales have seen a ride that was full of ups and downs. It was a compound growth of a mere 2% between FY20 and FY25. For H1FY26, sales of Rs 107 cr have been logged, which is lower than the number of Rs 157 cr in the same two quarters last year.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) jumped from Rs 24 cr in FY20 to Rs 36 cr in FY25, logging a compound growth of 8.5%. And for H1FY26, the company has recorded operating losses of over Rs 7 cr.
And when it comes to Net profits, the company has logged a negative compound growth of 4% between FY20 and FY25. And for H1FY26, the company has recorded losses of Rs 21 cr.
All these numbers make one wonder, what Kedia saw.
The API Advantage: Assets the Market is Ignoring
So, why is Kedia risking his money with this company?
To understand this, you must look past the stock price to see the asset. Mangalam Drugs isn’t some unreliable operator that started recently. They have been a strong player in the chemical industry since 1977.
That is nearly 50 years of survival. They don’t just mix chemicals; they manufacture sophisticated Active Pharmaceutical Ingredients (APIs). Here is what the market is ignoring:
- They Save Lives: They are a key player in Anti-Malarial drugs. They even partner with the Clinton Health Access Initiative (CHAI) to supply these drugs globally.
- Global Stamp of Approval: Their manufacturing plants in Vapi and Sangamner aren’t just sheds. They are WHO-GMP approved facilities. One must note that it is extremely difficult to get that certification.
- Product Range: They aren’t a one-trick pony. They make APIs for HIV, Herpes, and other critical treatments.
Kedia is likely betting that the business value (the factories, the licenses, the clients) is now higher than the market value (the stock price).
The Red Flags You Can’t Ignore
If you are thinking of copying this trade, you need to know the risks. This is not a safe bet like HDFC Bank.
- Promoters shares are Pledged: The promoters have pledged about 34.6% of their shares. If the stock falls further, banks could sell those shares, causing a crash.
- Volatility: The stock has a beta of 1.22. It moves fast. You could lose 10% or make 10% in a single day.
- Turnaround Time: We don’t know when the company will become profitable again. It could take a quarter, or it could take two years. May be longer…
And there are some other risks as well you must know.
| Factor | Risk Level | Description | Key Metric/Observation |
| Financial Health | High | The company is currently loss-making with negative EPS. A turnaround is speculative, not guaranteed. | Net Loss: Rs 7.4 Cr (Q2 FY26) |
| Promoter Confidence | High | A significant portion of the promoter’s holding is pledged. This creates a risk of forced selling if the stock price crashes further. | Pledged Holding: ~34.6% |
| Sales Growth | High | Revenue is shrinking rapidly, indicating a loss of market share or severe demand destruction. | Sales Growth (Qtr): -38% |
| Stock Volatility | Medium-High | The stock is highly volatile and moves significantly more than the broader market. | Beta: 1.22 |
| Debt Position | Medium | While not dangerously over-leveraged, debt is present in a loss-making environment, which squeezes cash flow. | Debt-to-Equity: ~0.65 |
| Market Cap Size | High | As a micro-cap, the stock suffers from low liquidity. Entering or exiting large positions without impacting the price can be difficult. | Market Cap: Rs 44 Cr |
A Quantitative Reality Check: Analyzing the Downward Spiral
In the current situation, one cannot sugarcoat things even if they wanted to. Things do not look good for Mangalam Drugs.
- Sales are Vanishing: In the September quarter (Q2 FY26), they sold goods worth Rs 49.54 Cr. That is a massive 38% drop from the previous year.
- Red Ink Everywhere: They aren’t making money right now. They posted a Net Loss of Rs 7.4 Cr in the last quarter.
- Negative EPS: The earnings per share is negative (-Rs 12.5).
This is what smart investors call a classic distressed Asset.
But one must understand here that Kedia isn’t buying current profits. He is buying a possible turnaround story. He is betting that the bad news is already priced in at Rs 24.
Future Multibagger or a Hole in The Boat?
This is a high-risk situation. With a potential for high reward. Mangalam Drugs is priced for bankruptcy, but Kedia sees a revival. He entered at Rs 24 and the stock is already moving up to Rs 26+. Is it a trap? Or is it the bargain of the decade?
If the company just manages to stop the losses and get back to break even, the stock could re-rate massively. But if you decide to buy, remember: You are buying a company in the ICU, betting that it will walk out healthy. For now, adding this to your watchlist is the smartest move. Let’s see if the patient recovers.
Disclaimer:
Note: We have relied on data from www.Screener.in and www.trendlyne.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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