Vijay Kedia-backed pharma stock crashes 8% after reporting 86% decline in net profits

Synopsis:
Neuland Laboratories Ltd, a pharma company backed by investor Vijay Kedia, witnessed a sharp sell-off after reporting a weak set of Q1FY26 numbers. The stock fell as much as 7.75 percent intraday to Rs. 12,251 as both revenue and profitability declined significantly on a sequential and annual basis.

A Vijay Kedia pharma stock slipped 8 percent after it reported a weak set of numbers for the June quarter, weighed down by lower customer orders and a sharp margin erosion.

Neuland Laboratories Ltd, in which renowned investor Vijay Kedia holds a 1.01 percent stake, opened at Rs. 12,761 against the previous close of Rs. 13,281. The stock hit an intraday low of Rs. 12,251, registering a major decline of 7.75 percent. The company’s market capitalization currently stands at Rs. 16,486.41 crore.

What’s the News?

Quarter-on-Quarter, revenue from operations fell 10.6 percent from Rs. 328 crore in Q4FY25 to Rs. 293 crore in Q1FY26. Operating profit dropped to Rs. 34 crore from Rs. 51 crore. Profit before tax declined sharply by 53.8 percent from Rs. 39 crore to Rs. 18 crore, while net profit halved to Rs. 14 crore, down 50 percent from Rs. 28 crore in the previous quarter. Operating margin stood at 12 percent, and EBITDA margin contracted from 17.30 percent to 14 percent.

Year-on-Year, Revenue dropped 33.4 percent from Rs. 440 crore in Q1FY25 to Rs. 293 crore. Operating profit dropped 72.4 percent from Rs. 123 crore to Rs. 34 crore. Profit before tax plunged 86.2 percent from Rs. 130 crore to Rs. 18 crore, net profit fell 85.7 percent from Rs. 98 crore to Rs. 14 crore. EBITDA margin also narrowed significantly from 28.90 percent to 14 percent over the same period. Q1FY25 includes exceptional items of profit on transfer of investment property of Rs. 20.6 crores.

Management Commentary

Commenting on the performance, Mr. Sucheth Davuluri, Vice-Chairman and Chief Executive Officer of the Company said, “While Q1 FY26 has been below par as a result of the flow of customer orders, it doesn’t change our outlook on the healthy growth that we anticipate this financial year.

The investments we have announced are proceeding according to plan and would be drivers of short as well as long term growth. We continue to focus on cost optimization opportunities across products and processes which will enable us to further strengthen our position in key products.”

In addition, Mr. Saharsh Davuluri, Vice Chairman and Managing Director, Neuland Laboratories added, “We see substantial growth this year from our commercial molecules even as there is a significant influx of new business from existing and new customers along with customers’ pipeline projects making exciting progress.

Given customers’ interest and evolving expectations we are continuing to invest in our people and capabilities which should see Neuland further differentiated as a CDMO with deep expertise as well as an agile innovative partner.”

Operational Highlights

The company reported net debt at Rs. (164.7) crore as of Q1FY26, compared to Rs. (110.2) crore in Q1FY25 and Rs. (228.7) crore in Q4FY25. However, working capital days increased to 145 days in Q1FY26 from 107 days in the previous quarter, primarily due to higher inventory levels.

In the Prime segment, key revenue contributors were Mirtazapine, Ezetimibe, and Escitalopram. The Specialty business was led by Dorzolamide along with other high-margin products. On the CMS front, growth was driven by commercial molecules and a steady influx of new project orders from biotech companies, indicating a rise in early-stage development work.

The company is steadily shifting away from low-margin Prime APIs to focus more on high-margin Specialty and CMS segments. The CMS vertical caters to innovator clients exclusively, requiring strict compliance with customer expectations. Meanwhile, the Specialty segment remains focused on complex technologies with selective partnerships.

About the Company

For over four decades, Neuland Labs has been at the forefront of manufacturing APIs through its cGMP-certified facilities, collaborating with clients in nearly 80 countries. The company has developed over 300 processes and 100 APIs, and filed around 980 regulatory submissions across the US, EU, and other major markets. It holds certifications from global regulators such as the US FDA, TGA (Australia), EDQM (EU), PMDA (Japan), ANVISA (Brazil), and others. Its business model spans Prime, Specialty, and CMS segments with growing focus on complex molecules and CDMO offerings.

Written by – Manan Gangwar 

Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Vijay Kedia-backed pharma stock crashes 8% after reporting 86% decline in net profits appeared first on Trade Brains.