The Economic Times daily newspaper is available online now.

    125% jump in a month, 360% in a year; safety rush turns this laggard a multibagger

    Synopsis

    The smallcap pharma scrip has been thumping rock and roll over the past few weeks.

    pharmaAgencies
    Morepen Laboratories has been thumping rock and roll over the past few weeks; it delivered multibagger returns for last financial year.
    NEW DELHI: As India faces the worst wrath of a deadly second wave of the Covid-19 pandemic and markets turn volatile due to various localized curbs and restrictions, investors are rushing towards safe heavens like pharma, FMCG and IT stocks to avoid wealth erosion.

    Pharma smallcap Morepen Laboratories has been thumping rock and roll over the past few weeks; it delivered multibagger returns for last financial year, and has already delivered over 125 per cent return for this financial year so far, up from Rs 32 on April 1. It has so far risen 365 per cent from its 52-week low hit on May 22 last year. The stock has also hit a 19-year high in the process.

    On Tuesday, the stock zoomed to Rs 72.05, and then hit the lower circuit limit of 5 per cent ahead of March quarter earnings. Some 20 million equity shares changed hands in Tuesday’s session. On Wednesday, the stock tanked a further 5% to Rs 62.

    Later, the company reported an over two-fold growth in consolidated net profit at Rs 26.76 crore for March quarter on higher revenue growth against Rs 11.02 crore profit posted for the same quarter a year ago. Consolidated revenues stood at Rs 290.76 crore for the quarter under consideration, up 39.53 per cent from Rs 208.38 crore reported for the year ago.

    Morepen Laboratories is a Rs 3,000 crore pharmaceutical and healthcare products company.

    “Morepen Labs is favourably placed to gain from the improved prospects for the pharma industry. The company has been successful in raising funds for capex,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

    In the last week of April, the company’s board approved raising of Rs 433 crore through issue of preferential shares to Switzerland’s private venture capital firm Corinth Investment Holdings and promoter group firm Liquid Holdings.

    Earlier in the month, the Securities Appellate Tribunal had set aside a Sebi order that had barred Morepen from raising capital for one year.

    Gaurav Garg, Head of Research at CapitalVia Global Research, said with the inclusion of new molecules to its bulk medication pipeline, Morepen Laboratories is eyeing a new multi-billion dollar global API (active pharmaceutical ingredients) segment.

    "Chronic and lifestyle disorders are among the target areas of these emerging molecules. Once set, it is going to be a big sentimental boost for the investors," Garg said.

    “In the latest quarter, sales of bulk drugs continued to expand at a steady pace and that of diagnostic devices increased significantly,” he said.

    The company’s manufacturing facilities are located in Masulkhana and Baddi (Himachal Pradesh). Its both API facilities are approved by USFDA and other international regulatory bodies of Europe, Asia and Australia.

    Morepen is the largest manufacturer of anti-allergy drug Loratadine and anti-asthmatic drug Montelukast. It enjoys a significant share of Atorvastatin and Rosuvastatin (cholesterol-reducing drugs) in the international market.

    "If the plans bear fruit, the stock which has been languishing for many years now may start looking up,” said Vijaykumar of Geojit Financial.

    Garg of CapitalVia Global is strongly bullish on the stock and expects the stock to hit Rs 94-97 level in the medium to long term.



    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more


    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
    The Economic Times

    Stories you might be interested in