- About Company
- History & Timeline
- Business Overview
- Why Rising ?
- Peer Comparison & Valuation
- Financial Performance
- Outlook & Opinion
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For over 37 years, Neuland Labs has been at the forefront of manufacturing APIs through its cGMP manufacturing facilities, working with customers in close to 80 countries. Neuland Labs has developed more than 300 processes and 75 APIs and has filed over 898+ Regulatory filings in the US (57 active US DMFs), the European Union (EU) and other geographies. Its manufacturing facilities are inspected and approved by the U.S. FDA and other leading regulatory agencies. Its record of quality manufacturing and reliability is highlighted by cGMP certifications.
History & Timeline
Neuland is into business of manufacturing APIs ( Active Pharma Ingredients). This business is divided into three segments 1. Prime APIs 2. Niche/ Speciality APIs 3. CMS (custom manufacturing service).
What is an API?
API (Active Pharmaceutical Ingredient) means the active ingredient which is contained in medicine to give intended effects of medicine. For example, an active ingredient to relieve pain is included in a painkiller. This is called API.
- 15 successful US FDA inspections.
- 75 APIs
- R&D centre at Hyderabad.
- 3 manufacturing plants in Hyderabad while Unit 3 has now become fully operational.
- Total volume of around 731 KL (225 KL at Unit I, 310 KL at Unit II and 197 KL at Unit III)
Prime API is highest revenue generating segment & CMS is highest profit generating segment.
Why Neuland share rose by 525% in last 12M ?
1. EBITDA margin which is 13.7% for FY20 is at 19.7% for Q3 FY21 and management has given guidance that EBITDA margin may reach past 20% given strong uptick in CMS business.
2. Unit 3 has begun commercial operations with capacity utilization of 75%.
3. De-risking the supply chain by decreasing raw material dependency on China from 60% to 10% which has also led to cost reduction.
4. Neuland has developed some APIs in peptide space in which very few pharma companies are working and company wants to enter this space. Apart from this, there are some other products also which are in pipeline.
5. Big investors have raised their stake in Q4 FY21 (discussed later in detail).
Peer Comparison & Valuation
Shareholding Pattern Analysis
Outlook & Opinion
Key thins to watch out :
- EBITDA margin if sustain at 19-20%.
- Growth in CMS and Specialty API business.
- Unit 3 capacity utilisation.
- Improvement in margins in Prime API.
- Commercialization and significant success in pipeline products which are at development stage.
Though outlook and growth prospects remain positive for company but currently trading at expensive valuation.
~By CA Sudarshan Bhandari , Beat The Street
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