Orchid Pharma shares hit 20% upper circuit as Investec sees 42% upside on strong growth

“The new management of the company continues to execute turnaround strategy and leverages core strengths. Over the past 3 years the management has tripled the EBITDA and deleveraged the balance sheet,” Investec observed in a note.

The brokerage predicted 35% plus EBITDA (earnings before interest, tax, interest, depreciation, and amortisation) compound annual growth rate (CAGR) for FY23-FY26E.

Investec also said that the debt has reduced and the pharma company would benefit from a revival in Active Pharmaceutical Ingredient (API) capacities and the business in the United States. The brokerage also observed that the management aims to transform the company into a fully integrated global ‘Ceph’ entity.

Notably, Orchid Pharma board approved a draft scheme of amalgamation with Dhanuka Laboratories Ltd (the promoter of Orchid Pharma) on December 6.

“There will be a change in the shareholding pattern of Orchid Pharma pursuant to the scheme, in accordance with the share exchange ratio,” the company said in a filing to the stock exchanges.

After the amalgamation of Dhanuka Laboratories Ltd into Orchid Pharma, the post-scheme shareholding of Orchid Pharma will be 74.45% for the promoter and promoter group, and 25.55% for the public. The pre-scheme shareholding pattern stood at 69.84% and 30.16%, respectively, the company informed the bourses.

The shareholding of Dhanuka Laboratories was 72.4% as on September 30, 2023. However, Dhanuka Labs sold 13 lakh equity shares on November 28, reducing their shareholding to 69.84%, the filing mentioned.

The Chennai-based Orchid Pharma manufactures and exports APIs and finished dosage products.

Shares of Orchid Pharma were trading 14.98% higher at ₹650.05 apiece on BSE at 1:54PM.