Pharma Stock Gains: Ashish Kacholia Boosts Stake by 6.7% in Q2

The Indian pharmaceutical industry continues to thrive, standing as a global leader with a market worth approximately $50 billion as of 2024. Projections indicate a promising expansion to $130 billion by 2030, as the sector plays a pivotal role in global healthcare. Known as the “pharmacy of the world,” India houses over 3,000 pharmaceutical companies and 10,500 manufacturing facilities, supplying around 20% of the world’s generic medicines and 60% of global vaccines.

One of the rising companies within this sector is Beta Drug Ltd., a company with a market capitalization of Rs 1,638.19 crore. Its stock recently closed at Rs 1,704 per share, reflecting a 2.23% increase compared to its previous close of Rs 1,742.85 per share. This upward movement has gained additional attention with prominent investor Ashish Kacholia’s decision to increase his stake in the company by 6.7% during Q2.

Ashish Kacholia’s Increased Stake in Beta Drug Ltd.

In the latest quarter, Ashish Kacholia purchased an additional 647,644 shares in Beta Drug Ltd., elevating his total stake to 12.5%—an increase of 6.74%. As of Q2 FY25, Kacholia holds 1,203,644 shares in Beta Drug, signaling his confidence in the company’s growth trajectory and future potential within the pharmaceutical industry.

Financial Performance of Beta Drug Ltd.

Beta Drug Ltd. has shown strong financial performance, demonstrating notable growth across various metrics. Here’s a breakdown of its financial highlights:

• Total Sales: The company’s sales rose substantially, growing from Rs 227 crore in FY22-23 to Rs 296 crore in FY23-24, reflecting its robust business expansion.
• EBITDA Increase: Consolidated EBITDA grew from Rs 53.88 crore to Rs 61.5 crore year-over-year, showcasing the company’s effective cost management and revenue growth.
• Net Profit: The company’s net profit also saw an increase, rising from Rs 30.7 crore to Rs 36.4 crore.

However, the EBITDA margin faced a slight decline due to higher raw material costs, particularly for platins, which comprise 15%-17% of the company’s total sales. Beta Drug Ltd. is strategically working to restore its EBITDA margins to a range of 24%-26% in FY24-25 by optimizing costs and shifting its focus to higher-margin products.

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Strategic Highlights and Key Initiatives

Beta Drug Ltd. has implemented several strategies to strengthen its market position and drive growth:

• Launch of Innovative Facilities: The company recently launched Asia’s first cytotoxic suspension facility, which is expected to advance its capabilities in drug production.
• Regulatory Approvals and Exports: Beta Drug filed for six new product approvals in the suspension and syrup segments and achieved 53 registrations for export markets, enhancing its global footprint.
• Expansion in Cosmetology: With over 100 personnel in the field, Beta Drug is expanding its reach in cosmetology and is focusing on integrating both oral and injectable products into its portfolio.

Additionally, the company is bolstering its hematology portfolio with two new products and identifying target markets to sustain growth. In a strategic move to improve margins, Beta Drug is reducing its reliance on platins and plans to transition to the NSE Mainboard in the next two months to increase visibility and market positioning.

Segment-Wise Business Performance

Beta Drug Ltd. operates across multiple segments, each demonstrating promising growth and expansion opportunities:

• Own Brand Segment: Sales in this segment saw a 27% increase, driven by the introduction of seven new products.
• International Business: The company secured another approval in Eurasia, strengthening its international presence. Additionally, its CDMO business expanded with three new clients and added products to its growing portfolio.
• API Segment: Revenue from the Active Pharmaceutical Ingredient (API) segment grew by 30% thanks to new product launches.
• Cosmetology Segment: Sales in the cosmetology segment reached Rs 1 crore in April, with a target of Rs 14-15 crore for FY24-25. Beta Drug Ltd. aims to increase SKUs and establish a manufacturing unit for derma and cosmetology products by FY25-26.

Future Expansion Plans and Goals

Beta Drug Ltd. has ambitious plans to expand into the European market. The company is actively pursuing US FDA approval within the next three years, a move that could open up significant growth opportunities in the American market. With exports targeted to contribute 35% of the company’s total business volume, Beta Drug Ltd. has earmarked a capex of Rs 30-35 crore for a new cosmetology plant and marketing authorizations to support this expansion.

In terms of revenue goals, the company aims for a top-line growth of Rs 450-500 crore, with the cosmetology segment expected to contribute Rs 30-40 crore. The strategic focus on building strong cosmetology brands, along with high-margin products, positions Beta Drug Ltd. to enhance its competitive edge in the rapidly growing pharmaceutical market.

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Company Profile: Beta Drugs Ltd.

Beta Drugs Ltd. specializes in manufacturing oncology drugs, offering a diverse range of medicines in pill, capsule, and injection forms. With a portfolio of over 50 medications, the company caters to various cancer types, including breast, brain, and bone cancers, making significant strides in cancer treatment solutions.

Disclaimer: The views expressed in this article are based on publicly available data and are not intended as financial advice. Investing in equities carries risks, and investors should exercise caution. Please consult with a certified financial advisor before making investment decisions.