Shares of this smallcap company surged 11 percent in Monday’s trading session after receiving approval for a diabetic drug from the Chinese Government. In one year, the shares have delivered more than 40 percent to its shareholders.
With a market capitalization of Rs. 2,542 crores, the shares of IOL Chemicals and Pharmaceuticals Ltd started on a flatter note at Rs. 404.10. During the trading session, the shares hit a high of Rs. 453, gaining around 11 percent and are currently trading at Rs. 443 apiece.
Such a bullish movement in the share price was observed after the company in an exchange filing announced that the company’s product “Metformin Hydrochloride” had been approved by the Center for Drug Evaluation (CDE) of the National Medical Products Administration (NMPA), China.
This approval will enable the company to export Metformin Hydrochloride to the Chinese market. Metformin Hydrochloride is an antidiabetic drug that is used to manage high blood sugar levels in diabetes patients.
Earlier, the European Directorate for the Quality of Medicines and Health Care (EDQM) issued a Certificate of Suitability for Losartan Potassium. This will enable the company to export Losartan Potassium to the European Market.
Looking at the company’s financial statement, the revenue decreased marginally by 3 percent from Rs. 563 crores in the June quarter to Rs. 545 crores during the September quarter. In addition, the net profits declined by around 18 percent from Rs. 46 crores to Rs. 38 crores during the same timeframe.
The company has earmarked an annual capex of Rs 150 to 200 crores for the next few years, with specific investments in expanding the capacity of its Ibuprofen plant and ramping up the production capacity of ethyl acetate.
Additionally, the company has planned new manufacturing facilities and projects for manufacturing multiple pharma (APIs) products, with an aggregate capex of about Rs. 90 crores.
Headquartered in Ludhiana, IOL Chemicals and Pharmaceuticals was incorporated in 1986. The company is a leading pharmaceutical (APIs) company and is a significant player in the speciality chemicals space. It serves the domestic and export markets. It is the largest player in Ibuprofen (pain killer) globally with a world market share of 35 percent.
Written By Vaibhav Patil
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