CompanyWatch: Nueland Laboratories - High on drugs
neulandindia.com
Stockwatch:(10/8/99)
BSE: Rs 135.00
NSE: Rs 142.00
P/E:54
Book Value:Rs 53.37
Really high on drugs
Hyderabad based Neuland Laboratories is learnt to have tied up with the US-based transnational Hoechst Marion Roussel (HML) for the export of ranitidine hydrochloride. Neuland had received the USFDA approval for its ranitidine facilities in August, and had applied under the drug master file with the US health authorities.
Those in the know claim that exports to HMR could commence by mid-November this year, which could open up growth vistas for Neuland. As it is, the US market for ranitidine is estimated at an annual $3bn, leaving enough scope for Third-World producers to pitch in with their wares. Besides ranitidine, Neuland already has the USFDA approval for salbutamol sulphate and approvals from European health authorities for ciprofloxacin hydrochloride.
Exports to Canada and European end users of Ciprofloxacin are continuing and Neuland has filed a DMF with the US health authorities too. Ciplox realisations are better in the US market, and profitability of the company is likely to improve consequently.
On the financial front, the corporate has replaced its high-cost debt with cheaper borrowings as also preference capital. But more aggressive debt reduction measures are to be put in place. Neuland is believed to be in negotiations with the Commonwealth Development Corporation (CDC) for private placement of its equity, the proceeds of which might be used to reduce its debt exposure as also finance other expansions.
A team from CDC, UK has already carried out the due diligence exercise and analysts claim Neuland may be able to place its equity around the Rs 200 per share levels.
Earlier, Exim Bank had granted a Rs 6-cr loan to the company for modernising and enhancing its ranitidine facilities, these being in addition to the funding made by ICICI.
If the debts get retired, Neuland's margins at the net level will improve dramatically. It has an equity of Rs 4 crore, a major chunk of which is closely held. (ET) |
