gland pharma share price: A bitter pill! Gland Pharma records biggest fall since listing, hits 52-week low
The drug maker, which announced its results for the September 2022 quarter, reported a 20%
year-on-year (YoY) decline in consolidated net profit at Rs 241.24 crore for the quarter on lower sales and higher expenses.
Following the announcement of earnings, shares of Gland Pharma plunged 15% to Rs 1,891, its new 52-week low, before trading at Rs 1,901 at 12:50 pm. The scrip had settled at Rs 2,224 on Tuesday.
Global brokerage firm Jefferies downgraded Gland Pharma to hold from a buy with a revised target price of Rs 2,241, given the near-term topline growth and margin headwinds.
The consolidated revenue from operations during the period under review was at Rs 1,044.4 crore, as against Rs 1,080.47 crore in the year-ago period, the company’s regulatory filing added.
Gland Pharma said revenue from its core markets i.e. US, Europe, Canada and Australia grew by 3% to Rs 747.5 crore in the second quarter, as against Rs 722.5 crore in the corresponding period last fiscal.
However, its India revenue was down 42% at Rs 72.6 crore, as compared to Rs 125.8 crore in the year-ago quarter, while the same for the ‘rest of the world’ market was also down 3% at Rs 224.3 crore, as against Rs 232.2 crore.
Kotak Institutional Equities said that Gland’s sequential sales recovery was lower than estimated in 2QFY23,
while margins fell to new lows, resulting in a PAT miss. The company has retracted its FY2023 sales and margin guidance with low visibility on timelines to normalcy.
“Owing to continued challenges on multiple fronts, we expect Gland’s growth and margins to reset downward to a new normal,” it said and maintained a ‘reduce’ rating on the stock with a new target price of Rs 1,975 from Rs 2,325 earlier.
Another domestic brokerage firm Nirmal Bang Institutional Equities has cut its revenue and EBITDA estimates for the next three fiscals due to near-term slowdown in growth, owing to cost inflation and volume decline in the US.
Margins are likely to remain under pressure in the near term due to cost inflation and negative operational leverage,
it added. The stock has corrected sharply, factoring in all near-term concerns, it said, with a buy rating and a target price of Rs 2,582.
“We are not positive about the US generics market, we like Gland Pharma because of its presence in the low competition injectable segment, ability to build economies of scale with a partnership model and a strong compliance track record,” it added.
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