Acuite upgrades credit rating of Bal Pharma; Stock spurts ~7%

25 Feb 2022 , 10:12 AM

Bal Pharma Limited (BPL), a fully integrated pharmaceutical company specialized in Bulk Actives, Prescription Drugs, Generics, and pharma intermediates, has announced that the leading credit rating agency, Acuite Ratings & Research has upgraded its ratings.

The ratings for long-term fund-based facilities and long-term term loan facilities have been upgraded to ‘BBB- from BB+’ indicating a ‘Stable’ outlook, for the company.

The rating on long-term fund-based facilities has been upgraded to IND BBB- from a historical rating of IND BB+ Stable. On short-term non-fund-based facilities, the rating has been upgraded to IND A3 from IND A4+. For Term Loan, the long-term rating has been upgraded to IND BBB- from IND BB+/ Stable.

At around 10.16 am, Bal Pharma Ltd was trading at Rs111.20 per share up by Rs7.15 or 6.87% from its previous closing of Rs104.05 per share on the BSE.

Improved Business Performance
The rating from BB+(ICRA) to BBB- has been improved based on the sound business performance of the Company. It is enhancing its business segments and maintaining strong momentum, especially the API’s business, which has been driving the overall growth. Bal Pharma registered 16% yoy revenue growth for 9MFY22. This was on account of the robust demand both in the domestic and the international markets. Various APIs such as Gliclazide, Ebastine, and Benzydamine have witnessed strong growth momentum.

The Company has also introduced 10+ new Formulation products in Asia and Africa, which will further diversify its geographical presence. Further, Bal Pharma has been continuously focussing on improving its International and Domestic market share in API and Formulation. To scale up the operations, the Company has been planning to incur CAPEX for expanding the facilities, which will now coincide with the PLI Scheme.

PLI Scheme: a shot-in-the-arm for Future growth
The Company is also a beneficiary of the Production Linked Incentive (PLI) scheme 2.0. for the Pharmaceutical Sector under “Atmanirbhar Bharat”. It has been placed under ‘Category C’ of the said scheme wherein Bal Pharma is eligible for incentives to the tune of Rs500 million spread over the next 5 years with an incremental annual average turnover of Rs1,250 million from eligible products in both API and Formulation segments. This target of incremental turnover coincides with the Company’s growth plans with no additional capex (over and above the capex planned), such incentives are expected to directly flow into the company’s profits.

Shailesh Siroya, Managing Director, BAL Pharma said, “The rating upgrade by the Acuite rating and Research is an indication of Bal Pharma’s improved performance. The upgradation reflects that we have a sound profile and capacity to outperform in the near future. Furthermore, we are performing well in all our business segments and have maintained their strong growth momentum. We are continuously aiming to increase the market share with new product launches over a period of time and expanding the existing products to the new markets.

Further, the focus is on strengthening the medical representative team to enhance the domestic formulation. Along with these, we believe that the PLI scheme introduced by the Government will be an addon to our growth targets, and it is expected to enhance Companie’s profitability over next 5 years”