Ace Investor Stock: Why Are Mukul Agrawal and Vijay Kedia Betting on This Company?

Synopsis: Neuland Laboratories has generated 1,275 percent returns in five years, powered by 67 percent profit CAGR, 72 percent stock price CAGR, 82 percent export revenue, and fast-growing CMS and peptide businesses, making it a top pick for ace investors.

In the stock market, certain companies gradually earn the trust of ace investors through consistent performance, strong business fundamentals, and long-term growth potential. This laboratory company has emerged as a favourite among seasoned investors, driven by its stable operations, expanding presence, and ability to deliver sustainable value over time.

Neuland Laboratories Limited, with a market capitalisation of Rs. 19,162.72 crore, closed at Rs. 14,950 on Friday, down by 0.90 percent from its previous day’s close price of Rs. 15,086 per equity share.

Founded in 1984, Neuland Laboratories is headquartered in Hyderabad, India. Neuland Laboratories Limited is a pharmaceutical company involved in the production and sale of active pharmaceutical ingredients (APIs) across India, Europe, the United States, and other global markets. The company also offers contract manufacturing services and specialises in peptide synthesis. 

Stock Return

Neuland Laboratories has shown mixed performance in the short term but delivered strong gains over longer periods. In the past three months, it recorded a slight incline of 1.7 percent, while the six-month return jumped to 23.12 percent. The one-year performance has been at 7.21 percent, and over five years, the stock has delivered an impressive return of 1,275.34 percent, highlighting its long-term wealth-creating potential.

Shareholding Pattern

As of September 2025, the company’s shareholding structure reflects a balanced ownership mix. Promoters hold a 32.64 percent stake, indicating continued commitment to the business. Foreign institutional investors (FIIs) own 20.6 percent, while domestic institutional investors (DIIs) hold 13.55 percent, highlighting strong institutional confidence. The government stake stands at 0.4 percent, and the public shareholding is 32.8 percent, providing healthy liquidity in the stock.

The stock also features prominently in the portfolios of well-known ace investors. Mukul Agrawal holds a 3.12 percent stake, equivalent to about 4 lakh shares, making it the largest holding in his portfolio, with a value of approximately Rs. 630.7 crore. He first made a fresh investment in the company in September 2017, starting with a 1.13 percent stake (around 1 lakh shares). 

Vijay Kishanlal Kedia, through Kedia Securities Private Limited, holds a 1.01 percent stake, or about 1.3 lakh shares, making it the second-largest stock in his portfolio, with a value of approximately Rs. 205.9 crore.. He initially entered the stock in December 2019 with a 1.95 percent stake, amounting to roughly 2.5 lakh shares.

What Makes This Stock a Top Pick for Ace Investors

Consistent Financial Returns

The company has delivered strong and consistent financial performance over the past five years, making it attractive to long-term investors. Revenue has grown at a healthy 14 percent CAGR, while profits have compounded at an impressive 67 percent CAGR, reflecting operating leverage and improving margins. This strong earnings growth has translated into shareholder value creation, with the stock price delivering a 72 percent CAGR over the same period, firmly placing it among high-performing laboratory and pharma names.

Strong Cash Flow Generation

Beyond earnings growth, the company’s cash flow profile adds to its investment appeal. As of March, it reported operating cash flows of Rs. 317 crore and a net cash flow of Rs. 44 crore, indicating efficient working capital management and disciplined capital allocation. Positive cash flows provide financial flexibility to fund expansion, R&D, and regulatory filings without excessive reliance on debt.

Evolution Into a Global API Exporter

The company has successfully transformed from a niche API manufacturer into a globally integrated player. As of FY25, 82 percent of total revenue came from exports, with the US and Europe accounting for over 89 percent of export revenues. Its regulatory strength is a key competitive advantage, with over 990 DMFs filed globally, including 72 active US DMFs and 499 European DMFs, along with filings across Canada, Japan, Korea, Australia, and other regulated markets. This extensive compliance footprint enables sustained access to high-value global markets.

Balanced Business Model Through GDS Portfolio

The Generic Drug Substances (GDS) segment adds scale and diversification to the business. It offers over 100 APIs across 10 therapeutic areas, catering to a broad customer base. Within GDS, Prime APIs, which are mature and high-volume molecules, contributed 33 percent of revenue in FY25, providing stability. Meanwhile, Speciality APIs, which are low-volume, complex molecules with limited competition, contributed 18 percent of revenue, supporting margins and reducing competitive pressure.

High-Margin CMS Business Driving Growth

Contract Manufacturing Services (CMS) is a key growth and margin driver for the company. The segment contributed 42 percent of revenue in FY25, rising to 44 percent in Q1 FY26, underlining its growing importance. CMS supports the development and manufacturing of New Chemical Entity (NCE) APIs for biotech and pharmaceutical innovators, covering the entire lifecycle from the Investigational New Drug stage to commercial-scale supplies. This end-to-end capability supports higher margins and long-term client relationships.

Financial Highlights

The company delivered a strong performance in Q2 FY26, with revenue rising to Rs. 514 crore, compared to Rs. 311 crore in Q2 FY25, showing a 65 percent year-on-year growth. On a quarter-on-quarter basis, revenue jumped sharply from Rs. 293 crore in Q1 FY26, reflecting a 75 percent sequential growth. Operating performance also improved significantly, with EBITDA increasing to Rs. 156 crore from Rs. 62 crore a year ago, a 152 percent YoY rise, and from Rs. 34 crore in the previous quarter, marking a strong 359 percent QoQ growth, driven by better scale and higher margins.

Net profit saw an even sharper rise during the quarter. Profit increased to Rs. 97 crore in Q2 FY26, up from Rs. 33 crore in Q2 FY25, translating into a 194 percent year-on-year growth. Compared to Rs. 14 crore in Q1 FY26, profit surged by 593 percent quarter-on-quarter, highlighting strong operating leverage and improved overall profitability.

A return on equity (ROE) of about 14.8 percent and a return on capital employed (ROCE) of about 18.7 percent, and debt to equity ratio at 0.16 demonstrate the company’s financial position. The stock is currently trading at a P/E of 98x higher as compared to industry P/E of 30.6x.

Analyst Outlook

Nuvama Institutional Equities has kept a ‘BUY’ call on Neuland Laboratories, with a target price of Rs. 22,130. The brokerage met the company during a non-deal roadshow and saw strong interest from investors. Nuvama believes Neuland can deliver strong growth over the next few years, supported by better use of existing plants, expansion of its product range, and entry into new high-growth areas like peptides. It expects revenue to grow at 24 percent CAGR and profit to grow at 49 percent CAGR between FY25 and FY28. 

Management Guidance

Neuland’s management remains confident about its growth outlook and has reiterated revenue growth guidance of 18–20 percent CAGR in the medium term. This growth is expected to come from higher capacity utilisation, growth from existing products, and the addition of one new molecule in its contract manufacturing business. On margins, management expects EBITDA margins to stay strong at 25–30 percent, showing confidence in profitability even as the company expands.

Neuland is focusing on complex APIs, especially peptides, which are seeing strong global demand due to drugs like GLP-1. The company is investing Rs. 250 crore to build a new peptide manufacturing facility, which is expected to start operations in about three years. This plant is expected to be profitable and improve margins over time.

Alongside this, Neuland is investing Rs. 190 crore in a new R&D centre, which will triple its research space and help develop new high-growth products. The company has already expanded its main manufacturing unit and may need more capacity as 16 ongoing clinical-stage projects move closer to commercialisation. Overall, management is focused on long-term, sustainable growth by specialising in complex and high-value APIs.

Conclusion

Neuland Laboratories has attracted ace investors mainly because of its steady growth, strong earnings, and improving business quality. Its focus on exports, high-margin contract manufacturing, and complex APIs has helped the company build a strong long-term growth story. While challenges remain in the pharmaceutical industry, Neuland’s clear strategy, healthy finances, and expansion plans explain why experienced investors continue to show confidence in the stock.

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