The Wockhardt stock closed higher in trade today even as the firm widened its Q2 net loss to Rs 23 crore compared to Rs 3 crore in the same quarter of the previous fiscal. The stock ended 9.02% or 47 points higher on the BSE. The stock has been gaining for the last four days and has risen 11.40% during the period. The stock touched an intra day high of Rs 578 (10.89%) intra day.
The mid cap stock has lost 19.23% during the last one year and is down 39.18% since the beginning of this year.
The pharma major on Saturday reported widening of its consolidated net loss at Rs 23 crore for the second quarter ended September 30.
The plans to raise up to Rs 1,800 crore through private placement of non-convertible debentures.
Sales during the quarter under review stood at Rs 1,125 crore. It was at Rs 1,022 crore in the year-ago period, it added.
The company said its total expenses during the quarter were higher at Rs 1,163.56 crore as against Rs 1,104.76 crore in the corresponding period last fiscal.
The board of directors in its meeting held on Saturday approved raising of funds through issuance of non-convertible debentures or bonds on private placement basis up to an aggregate amount not exceeding Rs 1,800 crore.
Wockhardt further said its board has also approved issuance of non-convertible non-cumulative redeemable preference shares of face value of Rs 5 aggregating up to Rs 500 crore on preferential basis to members of the promoter group, for which shareholder nod would be taken through postal ballot.
It, however, did not specify where the funds would be utilised.
Mustafa Nadeem, CEO at Epic Research said, "Wochardt Pharma has announced earnings which were negative and not in line with high expectations.
However, there were a few positives. The company was not able to deliver on bottom line but if you look at sales, it has increased 12% QoQ basis and 10% over the same period of previous year. Domestic business which accounts for 40% and EU markets which contribute 30% were flattish. Emerging markets and US business have grown 68% and 18% respectively in Q2FY19 as against Q2FY18.
Another big positive is infusion of capital. The company plans to raise Rs 1800 crore via debt instruments and Rs 500 crore by issuance of preference shares to promoter group.
Capital infusion by promoters is seen as a big positive for investors because you get confidence on promoter ownership and management. So, overall though bottom-line is negative, we see margins improving for H1 FY19 along with robust sales figures and capital infusion by promoters. Markets have a knack for discounting future and as we consider the current scenario is favourable for the pharma sector."
The business performance of the company during the second quarter showed marked improvement driven by growth in US and emerging markets, Wockhardt said. India business stood at Rs 455 crore in the quarter as against Rs 452 crore in same period last year. It contributed 40 per cent of the global revenue, it said.
The company said its US business grew by 18 per cent in rupee terms mainly on account of new products launches and increased market share of some of its products. The US business contributed 17 per cent of global revenue.
On the other hand, emerging market business contributed about Rs 144 crore, around 13 per cent of global revenue. The segment witnessed strong growth of 68 per cent in the second quarter, it said.
Wockhardt Limited is a pharmaceutical and biotechnology company which is engaged in manufacturing and marketing of pharmaceutical and bio-pharmaceutical formulations, active pharmaceutical ingredients (APIs) and vaccines. It operates a chain of approximately 10 super specialty hospitals, which offer treatment and care facilities in cardiology, neurosurgery, orthopedics, critical care, oncology, nephrology, urology and others. The firm has over 10 manufacturing plants located in India, the United Kingdom, Ireland and the United States.