Gland Pharma stock snaps two-day falling streak; should you buy?

Shares of Gland Pharma – a mid-cap pharmaceutical company – reversed a declining trend to jump almost 9 per cent to hit the day’s high level of Rs 979 apiece on the BSE during Tuesday’s session.

The stock on Monday touched a fresh 52-week low of Rs 861.50 per share on the BSE. It corrected over 32 per cent in the last two sessions after the company reported a weak set of Q4 numbers.

Gland Pharma’s net profit plunged around 72 per cent to Rs 78.68 crore during the March quarter of the financial year 2022-23 as compared to Rs 285.90 crore in the year-ago quarter.

The company’s revenue from operations also declined by 29 per cent year-on-year to Rs 785 crore during Q4. The fall in the top line can be attributed to a shutdown in the production line during the quarter at its Pashamylaram (Telangana) Penems manufacturing facility due to line upgradation.

Domestic brokerage firm Motilal Oswal expects, “A slow recovery over the next 12-15 months aided by new launches in China and other regulated markets, newer contracts in CDMO segment and inventory rationalisation of existing products.”

The brokerage maintained a ‘buy’ rating with a target of Rs 1,460 per share, implying over 63 per cent upside on the stock. It noted the multiple headwinds on revenue and operational cost have hit the company’s FY23 performance.

YES Securities, on the other hand, downgraded Gland Pharma to ‘neutral’ from ‘buy’ with a target of Rs 1,390 per share. It reckons FY24/25 earnings might be cyclically weak and 20-25x PE represents the multiple we assign to other generic players.

On Monday, Morgan Stanley Investment Funds sold 9,60,271 equity shares in Gland Pharma Limited at Rs 930.69 per share, a bulks deal data available on the NSE showed.

The stock has slipped more than 68 per cent in the last one year as compared to a nearly 14 per cent rise in the Nifty50 index.

Gland Pharma Limited is one of the leading pharma companies in generic injectable manufacturing with a focus on CDMO (Contract Development and Manufacturing Organisation) business and supplies its products to countries like USA and Europe besides India.