The shares of leading global API Contract Development and Manufacturing Organizations have fallen by 14 percent after the company’s net profit and revenues plummeted by 64 percent and 25 percent YoY, respectively in Q2FY25.
With a market capitalization of Rs 17,656.69 crore, the shares of Neuland Laboratories Ltd were trading at Rs 13,762.15 per share, decreasing around 13 percent as compared to the previous closing price of Rs 15,836.60 apiece.
Reason for Fall:-
The company shares have seen a bearish movement after Neuland Laboratories Ltd announced weak financial performance in which revenue plummeted by 25 percent on a yearly basis from Rs 420 crore in Q2FY24 to Rs 315 crore in Q2FY25, however, on a Quarterly basis revenue shrunk by 29 percent from Rs 444 crore in Q1FY25 to Rs 315 crore in Q2Y25.
Moreover, net profit plummeted by 64 percent on a yearly basis from Rs 89 crore in Q2FY24 to Rs 32 crore in Q2FY25, meanwhile, on a quarter-on-quarter basis, net profit dipped drastically by 67 percent from Rs 98 crore in Q1FY25 to Rs 32 crore in Q2FY25.
Prominent Investor:-
As of June 2024, a prominent investor Mukul Agrawal holds 4 lakh shares, equivalent to a 3.12 percent stake in the company.
Business Transition:-
The company is transitioning from a focus on prime APIs to a balanced portfolio of CMS (Contract Manufacturing Services) and GDS (Generic Drug Substances). CMS revenues reached ₹235 crores, driven by commercial molecules, with strong performance in specialty APIs like Dorzolamide and Donepezil, alongside key products like Mirtazapine and Escitalopram.
Market outlook:-
The company views FY25 as a year of consolidation with normalized revenues and profits, reflecting its investment phase. Growth momentum is expected to pick up from FY26, driven by new manufacturing facilities and commercial launches. Management remains cautiously optimistic despite inherent business variability.
Capacity Expansion:-
The company expects new production blocks in Unit-3 to be operational by H2 FY26. Currently, capacity utilization in Units 1 and 2 exceeds 90%, and ongoing expansion in Unit 1 is underway to meet growing demand, supporting the company’s future growth and production needs.
Challenges & Customer Engagement:-
Management recognizes risks such as currency fluctuations, raw material cost volatility, and geopolitical instability, and is actively mitigating supply chain risks by seeking alternatives to China. Increased customer interest, particularly from biotech firms, has expanded the project pipeline, while ongoing engagement has strengthened relationships through the additional molecule Projects.
Company summary:-
Neuland Laboratories Limited is engaged in the manufacturing and selling of bulk drugs. The The company caters to both domestic and international markets. It manufactures active pharmaceutical ingredients (APIs) and is an end-to-end solution provider for the pharmaceutical industry’s chemistry needs.
Written by:- Abhishek Singh
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