This pharma stock zooms over 100% in 18 trading days

The stock hit a new high of Rs 723 during the day, up 16 per cent.

Shares of IOL Chemicals & Pharmaceuticals (IOL) continued their northward journey and rallied 16 per cent to Rs 723 on the BSE on Friday, on the back of over two-fold jump in trading volumes. The stock of the pharmaceutical company hit a new lifetime high today and has appreciated by 105 per cent in the past 18 trading days. On June 16, IOL ended at Rs 352.05 on the BSE.

In the past three trading days, the stock has surged 31 per cent after IOL said CARE Ratings upgraded the credit ratings by one notch for the banking facilities. The rating agency has also withdrawn the rating assigned to the long-term loan facility of IOL Chemicals as the company has repaid term loan in full and there is no outstanding under the said loan as on date.

“The revision in the ratings assigned to the bank facilities of IOL takes into account the improvement in the operational performance of the company reflected by growth in total income and expansion in margins resulting in healthy growth in cash accruals,” CARE Ratings said in a press release.

The ratings however remain constrained by raw material availability and price volatility risk, and product concentration in its revenue profile. Going forward, the ability of the company to report improvement in operational performance and diversify the revenue stream would be key rating sensitivities, it said.

The rating agency further said IOL’s profitability margins improved significantly as reflected by an increase in PBILDT (profit before interest, lease, depreciation, and tax) margin from 24.74 per cent in FY19 to 30.84 per cent in FY20. The company registered a growth of around 12 per cent in total operating income to Rs 1,909 crore from Rs 1,695 crore, driven by an increase in sales volumes from 83,545 MTPA in FY19 to 1,12,640 MTPA in FY20 and higher sales realisation.

The overall gearing of the company improved to 0.30x as on March 31, 2020 vis-à-vis 0.85x as on March 31, 2019, on account of accretion of profits to net worth coupled with pre-payment of its long term debt.

IOL is one of the leading APIs/ bulk drug companies and is a significant player in the specialty chemicals space. The company is the world’s largest producer of the Ibuprofen with an installed capacity of 12,000 TPA and having a backward integrated manufacturing facility. Products are sold primarily to branded generic formulators both in India & Overseas.

At 03:02 pm, IOL was trading 11 per cent higher at Rs 689 on the BSE, as compared to a 0.22 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped three-fold with a combined 6.4 million equity shares changing hands on the NSE and BSE so far.