Shilpa Medicare to consider rights issue on June 23

Pharmaceutical company Shilpa Medicare said on June 21 that the board will consider raising funds through the rights issue of equity shares on June 23. The stock, however, did not react to the news as investors chose to book partial profits after the recent surge.

The stock rose over 10 percent in the previous session, backed by strong volumes. At 9.24 am, Shilpa Medicare was trading at Rs 262.30 on the National Stock Exchange, down a percent from the previous day.

Sentiment for the drug maker has been consistently improving, especially after the US Food and Drug Administration classified its Hyderabad unit as Voluntary Action Indicated (VAI) in late May.

The US FDA issues a VAI classification when it finds objectionable conditions in its inspections but chooses not to take or recommend regulatory action.

This comes as a relief for the company at a time when scrutiny from the US drug regulator is leading to delays in key launches for several pharmaceutical companies.

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The facility is identified as the testing laboratory in numerous ANDAs (abbreviated new drug applications) filed by the company and its agreed parties, making it a major manufacturing facility for Shilpa Medicare.

The unit is involved in analytical testing of drug products, drug substances, raw materials and packing materials, the company said.

The pharma firm has also moved forward in product development pipeline with progress in Phase-1 trial for recombinant Albumin, a life-saving product, which is in short supply, as noted by Arihant Capital Markets.

The brokerage expects expansion in the formulation business, new product pipeline, licensing income accrual and stake sale in certain businesses as growth triggers for Shilpa Medicare.

Baking that in, the broking house foresees a double-digit topline growth in FY24 along with an expansion in operating margins.

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