Share price of this small-cap pharma stock moved up by 10.02 percent on BSE to Rs. 6,799.3 in the trading session of Friday, compared to its previous closing price of Rs. 6,179.5, after receiving a ‘buy’ recommendation from Goldman Sachs.
With a market cap of Rs. 8,544.7 crore, the shares of Neuland Laboratories Limited closed in the green at Rs. 6,660, up by 7.78 percent.
In the last six months, the company has delivered positive returns of about 72.7 percent and nearly 221.2 percent of multibagger returns in the last one year. So far in 2024, it has given positive returns of around 26.1 percent.
Global brokerage firm Goldman Sachs initiated coverage on Neuland Laboratories Limited with a ‘buy’ recommendation and a target price of Rs. 9,100 per share, indicating a potential upside of nearly 47% from the previous closing price of Rs. 6,179.5.
Despite growth challenges in FY25 owing to a high base, the brokerage firm highlighted multiple catalysts for Neuland Labs, including an improved biotech funding environment, new capacity at unit-3 coming online by the end of FY25, and the commercialisation of a large molecule in FY26 or FY27.
Apart from that, the brokerage further mentioned that any progress on the US Biosecure Act might result in disproportionate advantages for the company.
Regarding the aforementioned Biosecure Act, it will restrict US federal funding for biotechnology equipment or services manufactured or delivered by Chinese biotechnology service providers mentioned in the legislation.
The act will also restrict federal loans, grants, and contracts with any entity that employs biotechnology equipment or services, and is currently being considered in both the US House of Representatives and the US Senate.
Goldman Sachs identifies many critical risks for Neuland Labs, including product or customer concentration risk, vendor consolidation, and possible regulatory compliance challenges.
In terms of financials, the company’s revenue from operations increased by 46.1 percent YoY from Rs. 269 crore in Q3 FY22-23 to Rs. 393 crore in Q3 FY23-24.
The net profit of the company also increased by 161.3 percent to Rs. 81 crore in Q3 FY23-24 from Rs. 31 crore in Q3 FY22-23.
As of December 2023, FIIs hold 22.69 percent of the shares, whereas DIIs hold 6.02 percent of the shares in the company, aggregating to 28.71 percent of the institutional holdings.
Established in 1984, Neuland Laboratories Limited is a leading manufacturer of active pharmaceutical ingredients (APIs).
The company is engaged in the business of manufacturing and selling of bulk drugs and serves both the domestic and international markets.
Written by Shivani Singh
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