Shares of Gland Pharma soared more than 5 percent on November 7, a day after the company reported in-line September quarter earnings. Although its net profit fell 20 percent on-year to Rs 194 crore, its revenue from operations jumped 32 percent to Rs 1,373 crore, driven by higher sales from the acquisition of the French pharma group Cenexi in January.

The pharma company’s core markets and India business showed superior performances, with a normalization in certain key products.

According to analysts, Gland Pharma‘s base business is back on track with a stellar performance. “We believe Gland Pharma earnings have bottomed out and are on track to recovery with stable pricing and volume-led growth across geographies,” said Jefferies in its report.

Outlook

The company continues to enhance its complex portfolio, with one FTF product already filed and at least two to be submitted to regulatory authorities soon. It has also expanded its facility for the plasma protein portfolio, noted Motilal Oswal.

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Gland Pharma will incur capex of €60 million over the next 18 months, including working capital to upgrade infrastructure and add capacity at Cenexi plants. “Currently, EBITDA margin at the division is very low due to high operational cost, and to improve margins, the company will incur the capex. New capacity should aid growth from FY25 onwards at the division,” said Jefferies.

Should you buy, hold, or sell Gland Pharma?

Gland Pharma registered Azacitidine, Rocuronium Bromide, Enoxaparin Sodium, Foscarnet sodium, and Micafungin Sodium in new geographies in Q2 FY24. Considering its growing market share and expansion in new geographical areas, Motilal Oswal analysts expect its rest-of-the-world (ROW) sales to reach Rs 750 crore at a 3.5 percent CAGR over FY23-25.

The brokerage reiterated its ‘buy’ call on the stock with a target price of Rs 1,920 per share.

Analysts at Jefferies believe that high market share in complex injectable products, and injectable facilities by peers getting OAI/Warning letter from US FDA will be the key catalysts for Gland Pharma. For the base case, the brokerage has pegged FY23-26E Revenue CAGR of 22 percent, and EBITDA CAGR of 21 percent with a target price of Rs 1,800.

In its Upside Scenario, the international brokerage estimates FY23-26E revenue CAGR of 24 percent, and EBITDA CAGR of 23 percent with a target price of Rs 2,135 per share.

Also Read | Emami shares gain as Q2 earnings beat estimates: Should you buy the stock?

At 10:05am, Gland Pharma shares were trading 5.3 percent higher at Rs 1,659.00 on the National Stock Exchange (NSE). In the last six months, the stock has risen nearly 20 percent, outperforming the benchmark Nifty.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

Shares of Gland Pharma soared more than 5 percent on November 7, a day after the company reported in-line September quarter earnings. Although its net profit fell 20 percent on-year to Rs 194 crore, its revenue from operations jumped 32 percent to Rs 1,373 crore, driven by higher sales from the acquisition of the French pharma group Cenexi in January.

The pharma company’s core markets and India business showed superior performances, with a normalization in certain key products.

According to analysts, Gland Pharma‘s base business is back on track with a stellar performance. “We believe Gland Pharma earnings have bottomed out and are on track to recovery with stable pricing and volume-led growth across geographies,” said Jefferies in its report.

Outlook

The company continues to enhance its complex portfolio, with one FTF product already filed and at least two to be submitted to regulatory authorities soon. It has also expanded its facility for the plasma protein portfolio, noted Motilal Oswal.

Follow our market blog to catch all the live action

Gland Pharma will incur capex of €60 million over the next 18 months, including working capital to upgrade infrastructure and add capacity at Cenexi plants. “Currently, EBITDA margin at the division is very low due to high operational cost, and to improve margins, the company will incur the capex. New capacity should aid growth from FY25 onwards at the division,” said Jefferies.

Should you buy, hold, or sell Gland Pharma?

Gland Pharma registered Azacitidine, Rocuronium Bromide, Enoxaparin Sodium, Foscarnet sodium, and Micafungin Sodium in new geographies in Q2 FY24. Considering its growing market share and expansion in new geographical areas, Motilal Oswal analysts expect its rest-of-the-world (ROW) sales to reach Rs 750 crore at a 3.5 percent CAGR over FY23-25.

The brokerage reiterated its ‘buy’ call on the stock with a target price of Rs 1,920 per share.

Analysts at Jefferies believe that high market share in complex injectable products, and injectable facilities by peers getting OAI/Warning letter from US FDA will be the key catalysts for Gland Pharma. For the base case, the brokerage has pegged FY23-26E Revenue CAGR of 22 percent, and EBITDA CAGR of 21 percent with a target price of Rs 1,800.

In its Upside Scenario, the international brokerage estimates FY23-26E revenue CAGR of 24 percent, and EBITDA CAGR of 23 percent with a target price of Rs 2,135 per share.

Also Read | Emami shares gain as Q2 earnings beat estimates: Should you buy the stock?

At 10:05am, Gland Pharma shares were trading 5.3 percent higher at Rs 1,659.00 on the National Stock Exchange (NSE). In the last six months, the stock has risen nearly 20 percent, outperforming the benchmark Nifty.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.