Shilpa Medicare hits fresh 52-week high; stock zooms 89% in a month

Shares of Shilpa Medicare were locked in 5 per cent upper circuit at Rs 491, also its fresh 52-week high, on the BSE on Monday in an otherwise weak market.

In the past one month, the pharmaceutical company's stock has zoomed 89 per cent after reporting a strong set of numbers for the quarter ended December 2019 (Q3FY20). In comparison, the S&P BSE Sensex slipped 2 per cent during the period.

Till 11:13 am, a combined 54,630 shares had changed hands on the counter and there were pending buy orders for 11,170 shares on the NSE and BSE, exchange data shows.

Shilpa Medicare is a global brand in manufacturing and supplying of affordable active pharmaceutical ingredient (API) and formulation globally in different regulated markets.

For Q3FY20, the company had reported more than four-fold jump in its consolidated net profit at Rs 55 crore on the back of strong revenues. It had profit of Rs 11.92 crore in the same quarter last fiscal. Earnings before interest, tax, depreciation, and amortisation (Ebitda) margin expanded by 1550 basis points to 32.1 per cent from 16.6 per cent in Q3FY19.

Operational revenue during the quarter grew 37 per cent to Rs 237 crore against Rs 173 crore in the corresponding quarter of previous year. The company’s formulations revenues were higher on account of launch of a new product in the US, while API revenues grew on the back of growth in oncology API business.

The management said even though the company’s Contract Research and Manufacturing (CRAMS) revenue has been sluggish as they are exiting the JV, its performance in the oncology API business has been robust.

Ebitda margins have also improved on the back of higher formulations revenue including product development charges. The company was also confident of healthy growth in the generic oncology, complex generics & 505B2 Business and a solid pipeline for the regulated market in the near future, it said.

On API business, the company plans to commercialize 3-4 new molecules each year. It also proposed to enhance capacity by 40 per cent via debottlenecking in all oncology production blocks and to install dedicated intermediate blocks to make intermediates available in a shorter delivery period. The company is planning to further optimize costs of formulation business by enhancing operational efficiencies such as reduction in cycle time, reduced testing.

As of December 2019, the promoters held 53.80 per cent stake in Shilpa Medicare. Institutional investors held 26.89 per cent holding, while individual shareholders held 11.36 per cent stake. The remaining 7.95 per cent stake are with others including bodies corporate, non-resident Indians.