Stock of this small-cap pharma company has zoomed over 50% in last 3 weeks

Wockhardt hit a fresh 52-week high of Rs 334.50, surging 19% on the BSE in Thursday's intra-day trade on the back of heavy volumes

Shares of Wockhardt surged 19 per cent on the BSE to a fresh 52-week high of Rs 334.50 in Thursday’s intra-day trade on heavy volumes.

The average trading volumes on the counter jumped over four-fold today. A combined 2.41 million equity shares, representing nearly 17 per cent of total equity of Wockhardt, changed hands on the National Stock Exchange (NSE) and BSE.

In the past one week, the stock of the small-cap pharmaceutical company has rallied 39 per cent after it reported improved financials for the quarter ended September 2023 (Q2FY24).

In the past three weeks, the stock price of the company has zoomed 52 per cent.

The company’s total revenue rose 11 per cent YoY to Rs 762 crore in Q2FY24, while its net loss narrowed to Rs 73 crore from Rs 207 crore in the year ago period. 

Wockhardt reported 62 per cent year-on-year (YoY) jump in its earnings before interest, taxes, depreciation, and amortization (ebitda) to Rs 81 crore.

On sequential basis, this grew 153 per cent from Rs 32 crore in the previous quarter. Ebitda margin improved 340 bp YoY and 590 bp sequentially at 10.7 per cent during the quarter.

However, on September 4, CARE Ratings revised its rating on the company's long term bank facilities to 'BB+' from 'BBB-' with a “Negative” outlook.

The revision in the ratings of Wockhardt is on account of continued weak financial performance q-o-q, as out of 10 previous quarters company reported losses in eight of them. Further, the pledge of share continues to remain high at about 69 per cent as on June 30, 2023, and there has been delay in de-pledging the same, it said. CLICK HERE FOR DETAILS

There is also delay in inflow of funds from the monetisation of US-based assets.

The ratings also factor in moderation in revenue and operating profitability during FY23, weakening of overall credit risk profile, significant one-time provisioning on account of write-off of the inventory and shut down of US plant, long pending regulatory overhang due to imposition of US FDA alert and the company’s exposure to regulated markets (especially US) which is witnessing increased competition, Care Ratings said. 

It added that the ratings, however, derive strength from established track record of company in pharmaceutical industry as well as experienced and resourceful promoters, diversified product portfolio across multiple therapeutic segments with established marketing network and global presence along with accredited manufacturing facilities with R&D focused approach.