Gland Pharma shares went up by over 13% on November 5, 2024. The steep rise resulted after the quarterly results for the company from July to September.
However, even after this surge in the shares, Gland Pharma has been significantly lagging behind the Nifty Pharma index. Overall, the index witnessed a 50% increase in 2024. This gap has been highlighted by the analysts at Kotak Institutional Equities (KIE). They also suggested that the underperformance limits the downside potential for Gland Pharma’s stock.
As of 12:54 pm IST on November 5, 2024, Gland Pharma shares traded at Rs. 1,803 on the NSE. Earlier over the year in 2024, the stock has been hugely stagnant. With that, KIE upgraded the Gland Pharma stocks from a “reduce” to an “add” rating and raised its target price by over 11% to Rs. 1,625.
Gland Pharma also reported a 16% year-on-year decline in net profit to Rs. 163.5 crore. But, the revenue inched up by 2% to Rs. 1,406 crore. Looking forward, the company’s new CEO, Srinivas Sadu expressed optimism, particularly in regulated markets like the United States. He has also mentioned plans to expand into new markets to support future growth.
In a company filing report, Mr. Srinivas Sadu stated – “Our core regulated markets, especially the US, continue to perform well. We are focused on strategic priorities, including entering new markets and laying a foundation for growth.”
In a strategic move, Gland Pharma also signed a binding term sheet with Dr. Reddy’s Laboratories. The key aim for this is to establish a biologics Contract Development and Manufacturing Organization (CDMO) partnership. With this strategic collaboration, Gland Pharma’s advanced biologics manufacturing facility will be utilized in Genome Valley, Hyderabad.
As per the KIE analysts, Gland Pharma’s earnings may have bottomed out. This marks a pivotal step forward in its biologics CDMO business. KIE will be closely monitoring the company’s B2C strategy in regulated markets under its new CEO. This is due to the rising uncertainties because of the CEO’s limited experience in key pharma regions that account for 75% of Gland Pharma’s sales.
KIE has also revised Gland’s FY25-27 EBITDA estimates. They have increased the company’s EBITDA by 2% due to higher base business margins.
Additionally, Jefferies also gave a “hold” rating to Gland Pharma and lowered its target to Rs. 1,840. As specified, Gland’s Q2 results met expectations but came amid a backdrop of low growth expectations.
