Shares of pharmaceutical companies were trading actively on Monday with 20 per cent of the newly listed Gland Pharma operating in the upper circuit, while Divi Laboratories rose to a record high, showing renewed investor interest on the BSE.
From the S&P BSE Healthcare Index Disman Carbogen Amsis, Ipca Laboratories, Sun Pharma Advanced Research Company (SPARC), Caplin Point Laboratories, Drs. Lal Pathlabs and Granules India closed up 4 per cent to 5 per cent on the BSE. Meanwhile, the S&P BSE Healthcare Index, the top beneficiary of the sectoral index, was up 1.7 percent at the S&P BSE Sensex, down 0.17 percent at 10:47 am.
The recently listed Gland Pharma closed at Rs 2,184 in the upper circuit of 20 per cent, a rise of 21 per cent on Friday, on the first day of its listing on the upside. With today’s rally, the pharma company shares are up 46 percent, while its issue price is Rs 1,500 per share.
The initial public offering (IPO) of the Fosun-promoted firm had managed to pass through the back of institutional investor support as a retail and high net worth individual (HNI). Analysts had recommended Gland Pharma citing its attractive valuations, healthy growth rates and margins.
Analysts at KR Choksi believe that Gland Pharma has a unique business model of B2B nature, aided by vertical integration and R&D expertise. In addition, the company has expansion plans in terms of geographic and capacity expansion and is also open to inorganic opportunities. It also has a strong balance sheet with negligible debt and strong cashflow.
Meanwhile, Divis Labs shares rose 5 percent to Rs 3,636, surpassing its previous high of Rs 3,499 touched on November 19, 2020. The stock has risen 18 percent as compared to 8 percent in the last one month. S&P BSE Sensex picks up.
The company reported a net profit of Rs 520 crore, jumping 45.6 per cent year-on-year (YoY) on a healthy operating performance for the September quarter (Q2FY21). Its revenue grew 21 per cent to Rs 1,749 crore. EBITDA (earnings before interest, tax, depreciation, and amortization) margin expanded 42.4 percent to 843bps YoY, due to improved gross margin performance and lower other expenses.
Analysts at Dolat Capital believe Divi is well positioned to capture its share of the growing CMO market coupled with gains in the generic API market driven by the Dual Sourcing / China + 1 strategy. The brokerage result update said the slow growth in API commercialization (scale gains from FY23 onwards) would be offset by expansion in the Custom Synthesis (CMO) business.
On the other hand, Wockhardt shares traded at a 52-week high of Rs 433, up 10 per cent in intra-day trading, a massive 32 per cent jump in the last two trading days. The company entered into an agreement with the UK government on 3 August 2020 to phase out the Kovid-19 vaccine, for which manufacturing would be done at Wockhardt’s subsidiary CP Pharmaceuticals, based in Waxham, North Wales. “As per the terms of the agreement, the company has reserved manufacturing capacity to allow the supply of multiple vaccines to the UK government in its fight against Kovid-19, including the AZD1222 co-invented by the University of Oxford. .The spinner-out is licensed by the company, VecTech, and AstraZeneca, “the company said in a statement.