Shares of Gland Pharma will be in focus on Tuesday morning after the bulk deals data for Monday showed Morgan Stanley Investment Funds Emerging Markets Equity Fund sold 9,60,271 company shares at a weighted average price of Rs 930.69 a piece on NSE, worth Rs 89.37 crore. The shareholding data available with stock exchanges suggest Morgan Stanley was not among shareholders with more than 1 per cent stake in the drug maker as on March 31. Foreign portfolio investors owned a total 4.33 per cent stake in Gland Pharma at the end of March quarter.
The selling by Morgan Stanley was seen amid a two-day selloff in shares of Gland Pharma where the scrip has lost one-third of its market value following a disappointing quarterly results. The buyer could not be ascertained.
Th stock fell 16.56 per cent to settle at Rs 893.50 on Monday. This was in addition to 20 per cent drop in Gland Pharma shares on Friday, as March quarter profit plunged 72 per cent YoY due to soft demand production shutdown at one of its facilities in Telangana. While the management cited multiple headwinds that hurt March quarter results, analysts said there were little clarity over what lies ahead.
Nomura India, which has a target of Rs 1,157 on the stock, said the company has refrained from providing any guidance on revenue growth and Ebitda margin. This brokerage has cut its earnings estimates by 15-17 per cent for FY24 and FY25.
"For Gland Pharma, we have assessed the fair value range of 15-20 times one-year-forward earnings. Given the increased uncertainty, and vulnerability to generic market pressures, we expect the stock to trade toward the lower end of this range," it said.
Motilal Oswal Securities has in fact cut its earnings per share by 22-36 per cent for FY24 and FY25 factoring in reduction in scope of business from a bankrupt customer, gradual revival in business due to shift of business by another customer to alternate supplier and reduced share of profit due to higher competition in existing product portfolio.
"The management alluded to multiple headwinds that hit the business in Q4, including the temporary shutdown in a production line and reduced supplies to a customer that is in financial difficulty and continued price erosion in the US market. But the granular details seem unconvincing – Thus, we are not confident of a bottom emerging regarding the sustainable level of revenue/profitability," Elara Securities said.