Gland Pharma shares tank 5% to hit new 52-wk low. Analysts divided over its health

Gland Pharma's share hit record lows on Tuesday, dropping as much as 5 per cent, after the company's performance in the December 2022 quarter. However, the brokerage firms have a mixed view on the beaten down pharma player after its earnings.

Gland Pharma's consolidated net profit dropped 15 per cent to Rs 231.95 crore, whereas the net sales fell 11.8 per cent decline in net sales to Rs 938.29 crore for the quarter ended on December 31, 2022. Even the operational performance on the company remained on the weaker side.

Gland Pharma's EBITDA slipped 11 [er cent to Rs 351.1 crore in the third quarter of the ongoing fiscal, whereas EBITDA margin decreased to 35% in third quarter as against 36% reported in in the corresponding quarter previous year. PAT margin reduced to 31 per cent in Q3FY23 from 33 per cent during the period under review.

Gland Pharma's shares plunged 5 per cent to Rs 1,309 on Tuesday after the Q3 results. The stock hit its 52-week low before making a marginal recovery. However, the scrip had settled at Rs 1377.35 on Monday.

Gland Pharma's stock has wiped out 64 per cent of its value from the 52-week high of Rs 3,599. Even in the last one year, the stock is 60 per cent down. It has lost 40 per cent value in last six months, whereas in the last one month, the stock is 15 per cent down.

Domestic brokerage firm Yes Securities has a buy rating on Gland Pharma with a target price of Rs 1,720 on the stock, suggesting an upside of 32 per cent its latest low. However, it has trimmed its target price from Rs 3,060 for the counter.

Gland reported a weak quarter on back of declines in US and ROW revenues YoY as lack of customer offtake, still lingering supply concern and company opting margin over market share led to revenue shortfall. It outlined several moving parts heading into Q4 and FY24- inventory rationalization at customer end, supply chain leading to production delays and
competition leading to price erosion, said Yes Securities.

Motilal Oswal has maintained its buy rating on the stock with a target price of Rs 1,700. The 58 per cent fall in the stock price in the past one year already factors in the deterioration in the business outlook, it said.

"Considering near-term business headwinds, we expect a 22 per cent earnings decline YoY in FY23. However, with the resolution of issues, a better business outlook for biologics/China and the addition of Cenexi’s business, we expect a 17 per cent earnings CAGR over FY23-25," Motilal Oswal added.

Kotak Institutional Equities said December was another subdued quarter for Gland Pharma. While the supply situation is gradually resolving, the demand environment is challenging with increased competitive intensity in the US being a key concern, it said.

Owing to continued challenges on multiple fronts, Kotak expects Gland’s growth and margins to reset downwards to a new normal. The brokerage has maintained 'reduce' rating on the stock, with a lower fair value of Rs 1,375 from Rs 1,660 earlier.

Another domestic brokerage firm Nirmal Bang Institutional Equities has downgraded the stock to ‘accumulate’ rating with a revised target price of Rs 1,472 for Gland Pharma.
 

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