Neuland Labs surges 36% in 4 days on robust Q2 results; up 270% in 9 months

The EBITDA margin improvement of 980 bps points to 33.4 per cent is a result of not only the revenue momentum but also a shift towards high margin business, the management said.

Shares of Neuland Laboratories hit a new high at Rs 5,260, up 6 per cent on the BSE in Thursday’s intra-day trade. The stock of pharmaceutical company was trading higher for the fourth straight day, surging 36 per cent after it reported a robust set of numbers for the quarter ended September 2023 (Q2FY24).

In past nine months, the market price of Neuland has zoomed 270 per cent from a level of Rs 1,424 on February 9.

In Q2FY24, the company’s reported earnings before interest, taxes, depreciation, and amortization (EBITDA) more-than-doubled to Rs 140.3 crore from Rs 69.4 crore in a year ago quarter. Margin expanded by 980 bps to 33.4 per cent from 23.6 per cent.

Profit after tax jumped 132 per cent year-on-year (YoY) at Rs 89.1 corre, as against Rs 38.3 crore in Q2FY23. The company reported record quarterly revenue of Rs 421 crore, up 43.2 per cent YoY from Rs 293.9 crore in previous year quarter.

Neuland is a pharmaceutical manufacturer providing active pharmaceutical ingredients (APIs), complex intermediates and custom manufacturing solutions (CMS) services to customers located in around 80 countries.

The YoY revenue growth driven by the CMS vertical is a culmination of the efforts the company put in over several years. The EBITDA margin of 33.4 per cent therefore is a result of not only the revenue momentum but also a shift towards high margin business, the management said. The CMS business continues to grow on the back of both development and commercial projects in line with the management’s expectations.

The company steadily shifted from low margin Prime to high margin Specialty and CMS segments. The CMS business caters to Innovator customers on an exclusive basis, developing and manufacturing APIs/Intermediates in line with rigorous customer expectations hence is highly concentrated in terms of customers, Neuland said in investor’s presentation. The specialty segment works on complex products and technologies, hence has a focused approach towards select customers, it added.