Mukul Agrawal portfolio stock zooms 122% in 4 months; up 1100% in 25 months

Neuland Laboratories share price hit a new high of Rs 14,500 on the BSE on Friday, surging 16 per cent in the intraday. The shares, however, closed 12.8 per cent higher at Rs 14,100 on the BSE on expectation of a strong September quarter earnings (Q2FY25). In comparison, the BSE Sensex ended 0.28 per cent lower at 81,381.

In the last four months, Neuland Labs share price has more-than-doubled, zooming 122 per cent, as the company posted robust earnings for the June 2024 quarter (Q1FY25). Since September 9, 2022, in the last 25 months, it has skyrocketed 1,100 per cent or 12 times from a level of Rs 1,201 on the BSE.

 

Investor Mukul Mahavir Agrawal held 400,000 shares, representing 3.12 per cent stake, in Neuland Lab at the end of June quarter, shareholding pattern data shows.

The company has not yet disclosed the shareholding pattern for the quarter ended September 2024.

Neuland Labs is a pharmaceutical manufacturer providing active pharmaceutical ingredients (APIs), complex intermediates and custom manufacturing solutions (CMS) services to customers.

The company recorded its highest-ever quarterly revenue in Q1FY25 at Rs 444.4 crore led by growth in the CMS business. The company recorded healthy earnings before interest, taxes, depreciation, and amortisation (Ebitda) margins at 28.9 per cent, up 174 bps over Q1FY24. Profit after tax jumped 58 per cent year-on-year at Rs 98.3 crore from Rs 62.2 crore in the year-ago quarter.

The management said the company continues to maintain that FY25 will be a year of normalisation of revenue growth and subsequently margins as the company continue to invest for growth. The management expect the company's business to regain momentum from FY26 onwards, basis its visibility from the company's portfolio of projects and products.

"As we evaluate our pipeline of projects and the flow of new projects, we remain enthusiastic on the strong potential of the CMS business over the long term. The Generic Drug Substances (GDS) business continues to build on the strong base we have with quality focussed customers, even as our R&D team is working on an exciting set of molecules to add to our portfolio," the management had said while announcing its Q1FY25 results on August 1.

Meanwhile, the market for API within the CDMO sector is likely valued at $118.09 billion in 2024 and is expected to grow to $178.47 billion by 2029. This growth represents a compound annual growth rate (CAGR) of 8.61 per cent from 2024 to 2029.

"There has been a noticeable trend towards increased outsourcing to CDMOs in the pharmaceutical industry. This shift allows companies to leverage the expertise, flexibility, and specialised skills offered by CDMOs. Organisations of all sizes, from small drug developers to large pharmaceutical and bio pharmaceutical companies spanning both early and late-stage development projects, are adopting this outsourcing strategy," Neuland Lab said in its FY24 annual report.

The revenue contribution from niche API and CMS will continue to increase over the next three years while that of prime API segment is expected to remain around 25 per cent. Healthy relationships with top pharma players and strong R&D capabilities ensure healthy operating margin, according to CRISIL Ratings.

The group caters to clients in India and overseas. It derives over 80 per cent of its revenue from export. In the CMS business, the entire revenue comes from regulated markets, such as the US, Europe and Japan. Diversity in geographic reach and clientele will continue to support the business risk profile, the ratings agency had said in its rationale dated March 27, 2024.