Lincoln Pharma stock is a good buy for portfolio investors

India is the largest provider of generic drugs globally and the Pharmaceutical industry is currently ranked third in pharmaceutical production by volume. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research and manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry. The country has the most number of pharmaceutical manufacturing facilities that are in compliance with the US Food and Drug Administration and has 500 API producers that make for around 8% of the worldwide API market. The Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicines in the UK. India is rightfully known as the “pharmacy of the world” due to the low cost and high quality of its medicines. Analysts have periodically researched most of the large Indian pharma companies but here is a Gujarat based small cap pharma company, Lincoln Pharmaceutical Ltd which merits investors’ attention due to its performance over the last decade. The company was established in 1979 as a partnership firm and got listed on the BSE in 1996 through an IPO. Lincoln has manufacturing plants at Khatraj and Mehsana in Gujarat with a green facility producing 65% of energy consumption through a renewable solar and wind project. The product portfolio consists of respiratory, ant-diabetic, anti-malaria, cardio, gynaecology, etc. Exports have grown phenomenally from 11% to over 56% in the last decade to markets such as Africa, Latin America and South East Asia . From the financial performance perspective, Lincoln has delivered a robust 30% CAGR in net profit, 20% growth in EBITDA and over 10% in revenue during the last ten years from FY 12 to FY 22 .Lincoln Pharma has reported net profit of Rs 21.61 crore, EBITDA of Rs 33.11 crore and total income of Rs. 140.12 crore for Q3FY23 having successfully completed multiple expansion and acquisition of a Cephalosporin plant. Export segment contributed 60.9% of the total revenue with export sales at Rs 81.46 crore for Q3FY23. The company is extremely positive that exports will get a further boost as it expects EU and Australian markets to start contributing in the near future. The company has received an approval from the Australian medicine and Medical devices regulator for its Khatraj facility and from WHO GMP for tablet capsule, dry powder suspension products for its Cephalosporin facility in Mehsana. The capacity expansion has been completed wherein now the production is expected to commence. Lincoln Pharma has a strong financial position with healthy cash accrual, healthy cash ratios and a net debt free status. The Lincoln Pharma stock quoting at Rs 340 on the bourses is a good fundamental buy for portfolio investors. Fund managers and analysts are keenly looking at the Lincoln stock to accumulate it for solid future gains. Stock market indices, the NSE Nifty and BSE Sensex lost 132 points and 398 points respectively to close the week at 16945 and 57527 levels on the back of last hour selling by foreign investors as surprise amendments to the Finance Bill 2023 hit investor sentiment. The Indian benchmark indices are expected to remain volatile with a downward bias next week as crucial macro numbers are awaited from US and China.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.