Suppose you had Rs 1 lakh during the initial months of 2020 for investment purposes, and you chose this pharma stock to invest the amount. After six years, that Rs 1 lakh of yours would have become Rs 72.5 lakh as this pharma stock delivered a whopping 7,146% return during the period.
And the pharma stock we are referring to here is Neuland Laboratories, which has transformed its business and earnings profile over six years, along with its share price rising from Rs 276 on April 1, 2020, to Rs 20,000 now. The Hyderabad-based pharmaceutical company's growth has been supported by the scale-up of commercial molecules, investments in complex manufacturing capabilities, and improving operating profitability.
The earnings trajectory helps explain the rally. Neuland's total income increased from Rs 766.6 crore in FY20 to Rs 2,053.1 crore in FY26, while profit after tax rose from Rs 15.9 crore to Rs 363.1 crore.
API Manufacturing To Complex Chemistry
Neuland manufactures active pharmaceutical ingredients, or APIs, used in medicines. Its business spans generic drug substances and contract development and manufacturing services, which support pharmaceutical innovators through molecule development and commercial manufacturing.
Over time, the company has expanded its capabilities in specialised chemistry, including peptides, and strengthened its research and manufacturing infrastructure. This has helped it pursue more complex projects and build relationships with pharmaceutical innovators.
The contract manufacturing business has become an important growth driver as key molecules move into commercial production and increase in scale. Management said that commercial projects contributed the majority of revenue in the June quarter of fiscal 2027. It also highlighted a growing pipeline of development and commercial opportunities.
The expansion of Unit 3, which was acquired earlier and commercialised in FY21, has also supported the company's manufacturing capacity. Its increasing utilisation has helped Neuland accommodate larger commercial opportunities.
Earnings Growth And Operating Leverage
The improvement in profitability has been particularly significant since FY22. Higher revenue, better operating leverage, and changes in business mix have helped increase earnings, although performance has fluctuated across financial years.
Financial metric | FY20 | FY26 |
Total income | Rs 766.6 crore | Rs 2,053.1 crore |
Ebitda | Rs 105.3 crore | Rs 603.4 crore |
Ebitda margin | 13.7% | 29.4% |
Profit after tax | Rs 15.9 crore | Rs 363.1 crore |
Earnings per share | Rs 12.4 | Rs 283 |
Peptides And New Projects Drive Future Growth
Neuland's next phase depends on converting its development pipeline into commercial revenue. Management said customer interest in peptides was increasing as the company prepared to scale up its commercial manufacturing capabilities. A new research and development centre and investments in manufacturing capacity are also expected to support more complex programmes.
The company has indicated that it intends to grow its business by strengthening specialty products while expanding its generic API and contract manufacturing operations. Its collaboration with Gland Pharma in sterile APIs is another step towards building differentiated capabilities.
However, quarterly performance remains uneven. Customer ordering patterns, regulatory timelines, and the pace at which development projects enter commercial production could affect growth. Neuland's ability to utilise new capacity efficiently and generate returns on its investments will be crucial.
The stock's rise from Rs 276 to Rs 20,000 reflects a period of substantial earnings growth and changing business prospects.
Whether this rally will sustain further depends on continued commercial scale-up, successful execution of new projects, and the company's ability to translate its investments into durable earnings.
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