Saturday, November 27, 2010


Traditionally ,Pharmaceutical companies are known as defensive bets .It also giving reasonable return in bull market ,that is why conservative investors are always giving preference for pharma companies in their portfolio. Considering the chances for  low cost manufacturing and recession proof(to some extent) status of the business R&D driven pharma companies are always catching market attention. Neuland Laboratories is such a company from Hyderabad started in 1984. Neuland is promoted by Dr D R Rao and its board is supported by eminent personalities includes Mr Humayun Dhanrajgir (Former MD of Glaxo India), P V Maiya  (Former chairman of ICICI Bank) Mr SP Budhiraja(Former MD of  IOC) ..etc. Company is in the manufacturing of Active Pharmaceutical Ingredients(API’s) ,Contract Research and manufacturing (CRAM) and Clinical research. It also started the production of Peptides last year. Neuland having two USFDA approved manufacturing units ,one at Bonthapally and  other at Pashamylaram  near Hyderabad and exporting its products to more than 40 countries worldwide..It also have a strong R&D with 165 scientists. Company is one of the largest manufacturer of Ranitidine in India.Neuland’s sales in segment wise is as follows, 45% from Quinolones ,18 % Cardiovascular,16% CNS,10% Anti Ulcerants,4% Anti Asthma and rest from others. Company having two subsidiaries Neuland laboratories KK Japan and Neuland Laboratories Inc USA. Recently company started a joint venture with  Cato Research Israel to offer clinical research services in India .Neuland owns 70% stake in this new company called Cato Research Neuland India Pvt.Ltd.  Neuland’s R & D division has identified 13 new products for development in this year.


In the history of last 10 years ,Neuland posted a loss ( Rs.7 Cr )in last year with a sales of Rs.282 Cr.This is mainly because of the  production disruption  due to renovation of plants, unfavorable exchange rate and some regulatory problem of one of its products. Most of these problems are stabilized now and company is expecting better days ahead. Company has taken various cost cutting measures and steps  for the optimum utilization of its resources. For the last two years ,Neuland made heavy investment in infrastructure including production facilities ,R&D and
H R. Benefits of these efforts are also expected to start from this year. It is a point to note that before the loss making last year ,in two previous years ,company posted EPS more than Rs.20/- and paid hefty dividends to share holders.Now the management is confident to achieve better results ahead and their optimism seems to be true based on the September qtr numbers. In the latest qtr Neuland posted a turnover of Rs.101 Cr v/s Rs.61 Cr and a net profit of Rs.3 Cr v/s Rs.70 lac .On an equity base of Rs.5.47 Cr ,company posted an EPS of Rs.5.30/- in latest qtr .Even after deducting the loss in first qtr ,it is expected to perform very well on a full year basis. A good management with transparency, integrity  and ethics is the big positive of this Company. Currently Neuland is trading @ Rs.119/-  which is even below its book value of Rs.126 /-. One may consider a BUY at current level with medium to long term view for decent return.


  1. dear vp ji, still BS transcomm and technofab engineering is buy or should i wait? I have already bought both of these as per your recommendations and will sell only at your recommendation. (i can buy more of these 2)


  2. Better to add in small lots in dips ,if you are a true investor

  3. Dear valuepick ji, you are really great.

    i request all the investors to see the growth of JK agrigenetics which valuepick had recommended few months back.

    hats off valuepick sir

  4. expecting few more jk agri like stocks from your side sir

    may god bless you

  5. Hi Vp

    I am from Hyderabad,the home town of Neuland.I know this company in past many years.Its promoters are very good professionals but not with deep pockets,thats why their share holding is below 40 % .Its assets are very good and a potential take over target too.

  6. Intresting company,strong margin of safety. But seems they have huge debt on their books,which is lagging their performance. Any positive steps to reduce debt.Its real Value Pick as u.



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