NEULAND LABORATORIES
Q1 FY 21 RESULTS REVIEW DT 28 08 20
Management
Davuluri Rama Mohan Rao Chairman & Managing Director
Davuluri Sucheth Rao Vice Chairman & CEO
Davuluri Saharsh Rao Joint Managing Director
Neuland is a no-compromise, API manufacturing service provider.
Its business is split into three core areas. Generic Drug Substances (GDS) . Custom Manufacturing Solutions (CMS) and Peptides.
Operational Highlights –YoY
§Total income increased by 13.5% from Rs.181.5 crore in Q1FY20 to Rs. 206.1 crore in Q1FY21 due to growth in both GDS and CMS businesses.
§ Prime growth largely led by Mirtazapine and Labetalol
§ Specialty business growth on account of contribution from multiple products.
§ CMS growth on account of dual growth from increasing penetration of existing products as well as development products
§ Increase in profitability margins
§ EBITDA margin increased from 10.5% in Q1FY20 to 16.7% in Q1FY21
§ Increase in PBT margins by 567 bps & PAT margins by 421 bps
§ Unit 3 on track for commercialization
Prime APIs and Specialty APIs collectively form Generic Drugs Substance (GDS) for Neuland
Capability - GENERIC DRUG SUBSTANCES
§ 3 US FDA and EU GMP compliant manufacturing facilities
§ Collective capacity: ~731KL
Unit U1, Bonthapally, Hyderabad 222.5 KL
U 2, Pashamylaram, Hyderabad 310.2 KL
U 3, Gaddapotharam, Hyderabad 197 KL
Adding capacities for backward integration and new business
REVENUE PERFORMANCE HIGH LIGHTS
Revenue CAGR of 19.8% for FY18-20 led by growth in all 3 businesses
•EBITDA growth of 38.9% CAGR in FY18-20 due to high margin CMS business and increase in GDS contribution
•Change in business mix with increasing amount of margins coming from CMS business and certain Specialty products and cost optimization measures helped improve profitability
Growth Strategy for Business
Business
Extend capabilities to organically build a sustainable GDS and CMS business
Chemistry
Deploy advanced chemistry skills to add differentiated products to its portfolio
Quality
Develop techniques like QBD to stay ahead of the curve & set precedents for “no quality compromise”
Scale
Invest into capacity to augment sales and accelerate business growth
Relationships
Leverage on Long –standing relationships with leading generic and innovator companies
Financials
Re-aligning revenue portfolio for a profitable growth
|
Neuland Laboratories (in Rs. Cr.) |
Jun '20 |
Mar '20 |
Dec '19 |
Sep '19 |
Jun '19 |
YOY |
QOQ |
|
Net Sales |
205.42 |
191.64 |
203.84 |
186.22 |
181.01 |
13.49 |
7.19 |
|
Consumption of Raw Materials |
102.08 |
88.99 |
105.45 |
111.2 |
85.72 |
19.09 |
14.71 |
|
Increase/Decrease in Stocks |
-0.67 |
-2.91 |
-1.83 |
-20.55 |
14.13 |
-104.74 |
-76.98 |
|
Employees Cost |
34.63 |
33 |
31.03 |
29.9 |
29.62 |
16.91 |
4.94 |
|
Depreciation |
8.86 |
7.63 |
7.82 |
8.28 |
7.55 |
17.35 |
16.12 |
|
Other Expenses |
35.54 |
42.45 |
41.04 |
40.72 |
32.86 |
8.16 |
-16.28 |
|
P/L Before Other Inc., Int., Excpt. Items & Tax |
24.98 |
22.49 |
20.34 |
16.67 |
11.11 |
124.84 |
11.07 |
|
Other Income |
0.7 |
1.78 |
1.02 |
0.57 |
0.52 |
34.62 |
-60.67 |
|
P/L Before Int., Excpt. Items & Tax |
25.68 |
24.27 |
21.36 |
17.24 |
11.63 |
120.81 |
5.81 |
|
Interest |
5.37 |
7.07 |
5.69 |
4.78 |
4.03 |
33.25 |
-24.05 |
|
P/L Before Tax |
20.31 |
17.2 |
15.67 |
12.45 |
7.6 |
167.24 |
18.08 |
|
Tax |
5.15 |
26.49 |
4.56 |
3.77 |
1.89 |
172.49 |
-80.56 |
|
Net Profit/(Loss) For the Period |
15.16 |
-9.3 |
11.11 |
8.69 |
5.71 |
165.5 |
-263.01 |
|
Equity Share Capital |
12.9 |
12.9 |
12.9 |
12.9 |
12.9 |
0 |
0 |
|
Basic EPS |
11.82 |
-7.25 |
8.66 |
6.77 |
4.45 |
165.62 |
-263.03 |
|
Annual |
Mar-20 |
Mar-19 |
Mar-18 |
Mar-17 |
Mar-16 |
|
Sales |
762.71 |
666.83 |
527.41 |
578.89 |
509.97 |
|
Other Income |
3.89 |
3.49 |
4.53 |
1.17 |
1.78 |
|
Total Income |
766.6 |
670.32 |
531.94 |
580.05 |
511.75 |
|
Total Expenditure |
692.1 |
634.32 |
499.08 |
491.78 |
445.27 |
|
EBIT |
74.49 |
36 |
32.86 |
88.27 |
66.48 |
|
Interest |
21.57 |
15.66 |
18.93 |
21.09 |
24.48 |
|
Tax |
36.71 |
3.9 |
1.87 |
20.32 |
14.92 |
|
Net Profit |
16.21 |
16.44 |
12.06 |
46.86 |
27.08 |
MP 955
PE 20.19881557
VOLUMES 5,24,546
52 Wk L/H 247.3 999
|
Historical Prices |
|||
|
3M BEF |
Current Price |
%Gain / Loss |
|
|
Open Price |
424 |
862.75 |
103.48 |
|
1 YR BEF |
|||
|
Open Price |
503.5 |
862.75 |
71.35 |
|
2YR BEF |
|||
|
Open Price |
680.45 |
862.75 |
26.79 |
|
3YR BEF |
|||
|
Open Price |
1280 |
862.75 |
-32.6 |
|
Share Holding Pattern in (%) |
||||
|
Standalone |
Mar-20 |
Dec-19 |
Mar-19 |
Dec-18 |
|
Promoters |
36.2 |
35.86 |
35.9 |
36.04 |
|
Pledged |
4.31 |
4.35 |
4.34 |
4.32 |
|
FII/FPI |
26.97 |
27.17 |
27.36 |
27.31 |
|
Total DII |
15 |
15.15 |
16.75 |
15.75 |
|
Fin.Insts |
0.24 |
0.17 |
0.03 |
0.03 |
|
Insurance Co |
0 |
0 |
0 |
0 |
|
MF |
2.17 |
1.92 |
3.92 |
3.79 |
|
Others DIIs |
12.59 |
13.06 |
12.8 |
11.93 |
|
Others |
21.83 |
21.81 |
19.97 |
20.9 |
|
Total |
100 |
99.99 |
99.98 |
100 |
STRENGTHS
Promoters increasing shareholding
Company with high TTM EPS Growth
Growth in Net Profit with increasing Profit Margin (QoQ)
Company with Low Debt
Book Value per share Improving for last 2 years
Recent Results : Growth in Operating Profit with increase in operating margins (YoY)
Companies with rising net profit margins - quarterly as well as TTM basis
Strong Momentum in price
WEAKNESSES
Inefficient use of shareholder funds - ROE declining in the last 2 years
Declining Net Cash Flow : Companies not able to generate net cash
OPPORTUNITIES
Negative to Positive growth in Sales and Profit with Strong Price momentum
THREATS
Red Flag: Resignation of Top Management
Stocks with high PE (PE > 40)
CHARTS
APRIL,20 lowest. Then onwards RISING SLOWLY,STEADILY
TECHNICAL RATING
Very Bullish
Valuation
Market Cap (Rs Cr.) 1,225.13
P/E 48.32
Book Value (Rs) 549.21
Dividend (%) 20
Industry P/E 36.15
EPS (TTM) 19.74
P/C 21.62
Price/Book 1.74
Dividend Yield.(%) 0.21
Face Value (RS) 10
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