gland pharma share price: A bitter pill! Gland Pharma records biggest fall since listing, hits 52-week low

New Delhi: Shares of fell 15% during Thursday’s trading session, posting its biggest one-day drop in more than two years of listing after a disappointing Q2 performance.

The drugmaker, which reported its results for the quarter in September 2022, reported a 20% YoY fall in consolidated net profit to Rs. 241.24 billion for the quarter on lower sales and higher spending.

Following the earnings announcement, shares of Gland Pharma fell 15% to Rs.1,891, their new 52-week low, before trading at Rs.1,901 at 12:50 p.m. The scrip had settled at Rs 2,224 on Tuesday.

Global brokerage Jefferies downgraded Gland Pharma to hold from buy with a revised target price of Rs 2,241 amid near-term sales growth and margin headwinds.

Consolidated operating income during the period was Rs 1,044.4 crore compared to Rs 1,080.47 crore in the same period last year, the company’s regulatory filing added.

Gland Pharma said revenue from its core markets ie US, Europe, Canada and Australia increased by 3% to Rs 747.5 crore in the second quarter from Rs 722.5 crore in the corresponding period last fiscal year.

However, sales in India fell 42% to Rs. 72.6 crore compared to Rs. 125.8 crore in the same quarter last year, while the rest of the world market also fell 3% to Rs. 224.3 crore against Rs 232.2 crore.

Kotak Institutional Equities said Gland’s sequential sales recovery in Q2 2023 was weaker than expected while margins fell to new lows, resulting in a PAT error. The company has withdrawn its revenue and margin guidance for fiscal 2023 with little visibility on schedules to normality.

“Due to ongoing challenges on multiple fronts, we expect Gland’s growth and margins to return to a new normal,” the company said, maintaining a “downgraded” rating on the stock with a new price target of Rs.1,975 from previously Rs.2,325 at.

Another domestic brokerage firm, Nirmal Bang Institutional Equities, has lowered its revenue and EBITDA estimates for the next three fiscal years due to the near-term slowdown in growth due to cost inflation and contracting volumes in the US.

Margins are likely to remain under pressure in the near term due to cost inflation and negative operating leverage, she added. The stock has corrected sharply, addressing 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 for its presence in the injectables segment with little competition, ability to achieve economies of scale with a partnership model and a strong track record of compliance,” it added .

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times)

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Russell Falcon

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