Home / Markets / Stock Markets /  Gland Pharma shares hit 52-week low: Buy, sell or hold post Q1 results?
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Shares of Gland Pharma plunged to 2,180 apiece on the BSE, hitting a 52-week low level in Thursday's trading session after reporting weak set of earnings for the first quarter ending June 2022 with consolidated revenue declining by 25.7% year-on-year due to weak performance in geographies such as US, India. 

However, the company’s gross margins improved by 284 bps YoY due to better product mix as low margins business for syringes in the domestic market missed in the last quarter. EBITDA margin at 31.5% was down 630 bps due to higher employee costs and other expenses. Its net profit fell by 20% YoY due to lower sales and low operating profitability. 

“Injectable companies (HIKMA, HOSIPORA, and Aurobindo) in the US market sales grew by ~4% YoY, we expect similar growth for GLAND in core markets over a longer period and high double digits growth in India &RoW. FY23 seems to be flat revenue growth due to increased competition and moderation demand for GLAND, therefore we recommend Hold rating on Gland Pharma shares with a target price of 2,700," said analysts at Axis Securities.

Gland reported a dismal Q1FY23 performance due to continued supply disruptions and elevated costs. Gland, being a B2B generic player, caters to the relatively lower end of the global injectable market, thereby aggravating the supply challenges. 

“While these pressures will largely ease out in H2FY23, they have unveiled higher vulnerability in its CDMO model versus peers. Long-term concerns on margins stay. We cut FY23-25E EPS by 11-13% to factor in lower sales (particularly in ROW), lower profit share in the US and higher costs. We also lower our target multiple from 28X Mar-24 EPS to 25X Jun-24 EPS to account for higher vulnerability of Gland’s B2B generic model to supply disruptions compared to other CDMO peers, as evidenced over the past few months," said Purvi Shah DVP (Fundamental Research) – Pharma Analyst Kotak Securities.

Kotak has retained its reduce rating on the pharma stock with revised FV of 2,325 ( 2,800 earlier). Gland Pharma shares are down more than 40% in 2022 (YTD) so far.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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