According to business standards, the Indian pharmaceutical industry is a global powerhouse, projected to reach $130 billion by 2030, growing at over 10% annually. Currently valued at $50 billion, India supplies 20% of the world’s generic medicines and accounts for 60% of global vaccine production, cementing its role as the “pharmacy of the world.
With a market capitalization of Rs 17,833.55 crore, the shares of Neuland Laboratories Ltd were trading at Rs 13,900.00 per share, increasing around 2.06 percent as compared to the previous closing price of Rs 13,619.80 apiece.
Matter for Expansion:-
Ace investor Mukul Agrawal has steadily increased his stake in the company since 2020. In September 2020, he held 2.10 lakh shares, rising to 3 lakh shares in 2021, 3.77 lakh in 2022, and 4 lakh in 2023. As of June 2024, he continues to hold 4 lakh shares, equivalent to a 3.12% stake, valued at an estimated Rs 614 crore.
Financial performance:-
The company’s total income for Q1 FY25 was ₹444.4 crores, marking a 21.7% growth from ₹365 crores in Q1 FY24. EBITDA (excluding exceptional items) reached ₹128.6 crores with a margin of 28.9%, a 174 bps YoY improvement. Gross margins rose to 66.1%.
Profit after tax for Q1 FY25 increased to ₹98.3 crores, up from ₹62.2 crores in Q1 FY24, benefiting from a ₹20.6 crores exceptional gain from the sale of surplus investment property. The company generated ₹50.9 crores in free cash flow, with a net debt position of negative ₹110.2 crores.
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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