India Globalization Capital Stock Forecast: From a legal perspective, the status of medical marijuana is in flux.
The United States still classifies marijuana as a Schedule I substance on the federal level, but 33 states, the District of Columbia, Puerto Rico, the US Virgin Islands, and Guam have approved comprehensive medical marijuana programs that are available to the public.
A number of other states have approved limited use of low THC/high cannabidiol (CBD) products for medical purposes, and two states are currently running trial programs that are not open to the public. In addition, a total of 14 states and territories have legalized recreational use of marijuana for adults.
These changes in state laws, coupled with new research into potential applications of marijuana as therapy, have created an entire industry – practically overnight. There is high demand for marijuana-derived products, and companies are responding with options that range from skin cream to pharmaceuticals. The most successful are realizing substantial revenues as a result.
Investors are eager to get on board with organizations that stand to profit from this trend, but it’s a difficult area of the market to navigate. Many of the companies are new arrivals, so there is little history to rely on. Even companies that are well-established are new to marijuana-based products.
India Globalization Capital has recently caught analysts’ attention with its research into medical use of certain marijuana-derived chemicals. Investors want to know, is this the right business to back?
Use of Marijuana in Medicine
According to some, chemicals from cannabis plants can cure everything from warts to cancer. While these far-reaching claims have not been scientifically proven, many biotech companies are deep into research on whether and how cannabis can be used as therapy for the treatment of some diseases.
The primary focus is on cannabinoids, which are chemicals related to the delta-9-tetrahydrocannabinol (THC) in marijuana plants. These plants contain more than 100 cannabinoids, some of which can be quite powerful.
Current research is looking at potential applications for THC itself, as well as CBD. THC is the mind-altering chemical that inspires recreational use of marijuana. It is known for reducing nausea and increasing appetite.
There is also some evidence that THC improves the symptoms of conditions affecting muscle control, and it has been shown to decrease inflammation and pain.
CBD, on the other hand, lacks the mind-altering effects of THC, but it has a wider range of potential applications in healthcare.
There is some research showing effectiveness in treating pain, reducing inflammation, and controlling epileptic seizures.
Some preliminary studies indicate it may have a place in the treatment of addiction and mental illness. There are already two CBD-based medications that have earned FDA approval for the treatment of severe childhood epilepsy.
Note that the human body naturally produces cannabinoid chemicals, which affect the regulation of pleasure, concentration, thinking, memory, movement, pain, appetite, and all of the five senses.
Biotech companies are exploring whether and how marijuana-derived cannabinoids can be used to enhance the body’s ability to manage a variety of related diseases, including the following:
- Immune diseases like HIV/AIDS and multiple sclerosis (MS)
- Acute pain and chronic pain disorders
- Parkinson’s disease
- Alzheimer’s disease and dementia
They are making progress in studies that demonstrate cannabinoids’ ability to slow the growth of cancer cells – and in some cases, kill them altogether.
What Does India Globalization Capital Do?
India Globalization Capital [NYSE: IGC] actually has two separate, unrelated businesses.
The first is an infrastructure business that rents heavy construction equipment, executes construction contracts, and purchases and reseals the physical commodities used in infrastructure.
Frankly, few investors and even fewer analysts are interested in that area of the company.
Of greater interest is India Globalization Capital’s biotech arm, IGC Pharma,, which is involved in the research, development, and commercialization of cannabinoid-based therapies for chronic pain conditions, Alzheimer’s disease, and Parkinson’s disease.
The company is also working on a line of CBD products for pets. For the moment, the primary CBD product is a line of CBD-infused beverages.
India Globalization Capital was founded in April 2005, and it held its IPO in March 2006. In recent years, the company has had something of a rocky road.
The biggest challenge occurred in October 2018, when NYSE American suspended trading of the company’s common stock and announced plans to submit an application to the Securities and Exchange Commission (SEC) to delist it.
The NYSE’s argument was that India Globalization Capital [NYSE: IGC] was listed as an infrastructure business, and it has substantially changed its area of focus with the move to CBD drinks.
India Globalization Capital [NYSE: IGC] successfully challenged the NYSE decision, and stock resumed trading in February 2019.
The Ups and Downs of India Globalization Capital Stock
When India Globalization Capital [NYSE: IGC] worked exclusively in infrastructure, there was very little to say about its stock. The company’s financials were grim, and there was no sign of an impending turnaround.
For the three months ending June 2019, IGC had total revenue of $1.5 million, but cost of revenue came in at $1.4 million. With the addition of $553,645 in selling, general, and administration costs (SG&A), the end result was a loss of $512,296.
However, the moment leadership announced the company’s move into CBD, stock prices spiked 500 percent. The day before the announcement, IGC’s market capitalization was $78 million. A short time later it was a whopping $295 million.
Another piece of good news came on September 19, 2019, which boosted stock further. The company announced that Puerto Rico’s Institutional Review Board (IRB) approved plans to move forward with a double-blind placebo-controlled study of the safety, efficacy, and tolerability of its CBD-based therapy for dementia due to Alzheimer’s disease.
The CEO stated that they expect results to show that the treatment prompts improvement in patients’ neuropsychiatric symptoms, including agitation and aggression, anxiety, delusions, dysphoria, disinhibition, and sleep disorders.
Based on this approval, the company plans to file an application with the US Food and Drug Administration to begin similar trials in the US.
These factors appear to indicate that India Globalization Capital is a buy – but is it? What is India Globalization Capital’s stock forecast? A number of serious risks are giving investors reason to reconsider.
The Risks of Investing in India Globalization Capital
Overall, IGC’s track record is poor, and while it has some interesting products coming to market, most analysts doubt that the company will be successful.
Few details of the new CBD division’s strategy are available. Those who have been watching the company for a while know that IGC has a history of launching new lines of business when they become popular, taking advantage of the financial windfall when stock prices spike, then moving on to the next big trend.
For example, in 2017, IGC announced it would move into blockchain technology – a plan that went nowhere.
Careful review of regulatory filings shows almost no investment in research and development. The total cash devoted to study of CBD therapies appears to be around $150,000 per year. As anyone who watches the biotech industry knows, standard R&D investments run into the millions for a project like this.
Overall, this company is better avoided by conservative investors. There are many other, more established options for investors who want to get into the cannabis market.