Neuland Labs jumps 6% as board approves Telangana facility expansion

Neuland Laboratories Ltd

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Shares of drug firm Neuland Laboratories rose nearly 6 percent on January 22 after the company announced that its board of directors approved capital expenditures totalling Rs 342 crore for capacity expansion at its facilities in Telangana.

At 11:45 AM, shares of Neuland Laboratories were trading 5 percent higher at Rs 13,812. The stock has declined over 3 percent on a year-to-date basis, in line with the Nifty 50's performance.

Neuland Laboratories is investing significantly in expanding its manufacturing capacities at two key facilities in Telangana to meet growing demand.

The company plans to increase the capacity of its peptide synthesizers at its Unit 1 facility in Bonthapally Village, Gummadidala Mandal of Sangareddy District. The existing capacity of 0.5 KL, with a utilization rate of 30 percent, will be expanded by an additional 6.37 KL by FY27. The total investment for this expansion is Rs 254 crores, which will be financed through a mix of borrowings and internal accruals. This capacity enhancement will support the development and commercial production of peptides for the GDS and CMS businesses.

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At its Unit 3 facility in Gaddapotharam Village, Jinnaram Mandal of Sangareddy District facility, Neuland Laboratories intends to add 52 KL to the existing 321 KL capacity. The current utilization stands at 40 percnet and the proposed capacity addition is expected to be completed within 15 to 18 months. The investment required for this expansion is Rs 88 crores, to be financed entirely through internal accruals. This move is aimed at meeting the increasing demand from customers and ensuring the company remains well-positioned for future growth.

Neuland Laboratories reported a decline in its standalone quarterly performance for September 2024. Net sales fell by 25.59 percner, reaching Rs 310.84 crore, compared to Rs 417.75 crore in the same period last year. The company's net profit also dropped sharply by 64 percner, totaling Rs 31.96 crore, down from Rs 89.06 crore in September 2023. EBITDA followed suit, decreasing by 53.2 percent to Rs 65.67 crore from Rs 140.35 crore in the previous year's quarter.

Neuland Laboratories specialises in the production and sale of bulk drugs, serving both domestic and international markets.

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