Solara Active Pharma shares gained over 9 percent in early trade on June 15 amid heavy trading volumes.
At 1.30 pm, 11 lakh shares changed hands on BSE and National Stock Exchange (NSE) combined. This is 11 times the one-month average traded volumes of 1 lakh shares.
The stock was trading at Rs 385.30 on the NSE, up 7.5 percent from the previous close.
Solara Active Pharma Sciences focuses on the production, processing, formulating, merchandising, distributing, and trading of active pharmaceutical ingredients.
The stock saw a sharp upmove of 300 percent between March 2020 to July 2021, touching Rs 1,800 levels. The company's then main offerings — Ibuprofen, Favipiravir and Gabapentin — were in demand due to the coronavirus outbreak, analysts said.
As COVID ebbed, the company’s performance was muted, mainly due to subdued demand and higher costs driven by a volatile material pricing environment and increased logistics costs.
In February 2022, the company's chief executive officer and chief operating officer stepped down.
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What has changed now?
Solara Active is now witnessing a recovery in base business and new launches.
"One of our key achievements in FY23 was securing Ibuprofen DMF approval in China. We believe we are the first company outside of China to achieve this milestone. Sales have already commenced," managing director Jitesh Devendra said in a recent earnings call.
DMF is short for drug master files. It is a type of submission made to a regulator to provide important information related to the drug.
In Q3 FY23, the company's Vizag plant also commenced operations, a key trigger for the stock. Out of the five new US DMFs filed in the last financial year, three are from Vizag, the management said.
"From H2 FY24 onwards, there'll be substantial improvement in the capacity utilisation of Vizag plant and during the Q4 FY24, the capacity utilisation will be more than 60 percent in Vizag," the management said during the call.
Macquarie, in a 2021 report, said the company had relationships with its clients for more than 15-20 years for its key molecules. "In high volume APIs like Ibuprofen, Solara enjoys a global cost leadership," it said.
According to Bloomberg, the consensus target on the stock is Rs 483, a 25 percent upside from current levels.
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