Neuland Labs zooms 20% on robust December quarter results

The stock is locked in upper circuit of 20 per cent at Rs 588 on the BSE after the company reported an over six-fold jump in net profit at Rs 4.6 crore in December 2018 quarter.

Shares of Neuland Laboratories have locked in upper circuit of 20 per cent at Rs 588 apiece on the BSE after the company reported an over six-fold jumped in net profit at Rs 4.6 crore in December 2018 quarter (Q3FY19). The pharmaceutical company had a profit of Rs 0.74 lakh in the year-ago quarter.

Total revenue grew 40 per cent at Rs 172 crore against Rs 123 crore in the corresponding quarter of previous fiscal. Ebitda (earnings before interest, taxation, depreciation and amortisation) margin improved 100 basis points to 9.5 per cent from 8.5 per cent in the previous year quarter.

While the profitability margins haven’t fully recovered from the impact of raw materials price increase, the management believes it has bottomed out with respect to raw material prices.

“The GDS (generic drug substances) business has been the primary driver of growth this year and we are happy with growth across products. While we have a reasonable contribution from the CMS (custom manufacturing solutions) business this quarter, it is still slightly below expectation. From a sales perspective, we would consider this quarter as a baseline for future performance as we see increasing traction in the CMS business,” Sucheth Davuluri, Vice-Chairman and Chief Executive Officer of Neuland Laboratories said while announcing Q3 results.

The company said it added 9 new projects this quarter, 4 of which are commercial stage intermediates. The USFDA (United States Food and Drug Administration) audit for unit-2 completed with no observations, it added.

The counter has seen huge trading volumes with a combined 251,512 equity shares changed hands against an average sub 50,000 shares were traded daily in past two weeks. There were pending buy orders for 26,909 shares on the NSE and BSE.