One of the small-cap stocks engaged in manufacturing and selling bulk drugs and caters to both domestic and international markets. The stock has plunged by 7.22 percent after a sale of a 3.8 percent stake worth Rs. 780.30 crore by Smallcap World Fund
Stock Price Movements:
In Thursday’s trading session, Neuland Laboratories Limited’s share plunged to an intraday low of Rs. 15,525, nearly around 7.22 percent from the previous close of Rs. 16,948.65. The stock opened at Rs. 15,999 and is currently trading at Rs. 16,157.10 with a high of Rs. 16,433.30. The market capitalization now stands at approximately Rs. 20,729.38 crore.
What Happened:
In Neuland Laboratories, Smallcap World Fund reportedly sold approximately 4.9 lakh shares, representing a 3.8 percent stake. The block deal, which involved transferring shares at an average price of Rs 15,900, amounted to a transaction worth Rs 780.30 crore on the exchanges.
Business Outlook:
Management expects steady revenue for FY25, with growth anticipated to resume in FY26 due to a strong order pipeline and increased customer demand. The company emphasizes that yearly assessments provide a more accurate view of growth potential than quarterly comparisons.
Capacity Building:
Neuland will complete the new production block at Unit 3 by FY25, with commercial production starting in FY26. The company stresses flexibility and agility to adapt to evolving business conditions.
Strategic Focus:
Neuland aims to maintain a balanced approach between its CMS and GDS businesses, focusing on high-value molecules and operational efficiency. The company is also exploring new technologies, such as peptides, to expand its product portfolio and attract larger pharmaceutical clients.
Shareholding Pattern:
As of September 2024, the promoters hold 32.64 percent of Neuland, while foreign institutional investors own 26.46 percent, domestic institutional investors hold 6.38 percent, the government owns 0.40 percent, and the public holds 34.12 percent.
Mukul Mahavir Agrawal and Kedia Securities Private Limited own 3.12 percent and 1.01 percent, respectively, of the public stake.
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Financial Performance:
Neuland’s revenue dropped by 25.60 percent, from Rs. 418 crore in Q2 FY24 to Rs. 311 crore in Q2 FY25. Net profit decreased by 62.92 percent from Rs. 89 crore to Rs. 33 crore. The company reported EBITDA of Rs. 65.7 crore with a margin of 20.8 percent, compared to Rs. 140.3 crore in Q2 FY24.
Gross margin fell to 56.3 percent from 59.8 percent. In H1 FY25, the company generated Rs. 45.8 crore in free cash flow and reduced its net debt position to negative Rs. 94.3 crore after repaying Rs. 17.1 crore of debt.
Ratios Analysis:
Neuland has achieved strong growth, with a 5-year CAGR of 18.51 percent in revenue and 79.72 percent in net profit. The company’s return ratios are strong, with expected ROCE of 33.3 percent and ROE of 26.4 percent.
The debt-to-equity ratio is low at 0.08x, showing that the company is nearly debt-free. Neuland’s EPS stands at Rs. 218.
Company Overview:
Neuland Laboratories Limited manufactures bulk drugs, specializing in active pharmaceutical ingredients (APIs). The company provides comprehensive solutions for the pharmaceutical industry, offering products such as levetiracetam, mirtazapine, and ciprofloxacin.
Written By – Nikhil Naik
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