Gland Pharma Gets 'Neutral' Upgrade From Nomura But Target Price Slashed — Here's Why

Nomura has upgraded its rating on Gland Pharma Ltd. from 'reduce' to 'neutral', but cut its target price, after the firm's third quarter results showed a dip in US exports.

The research firm slashed the target price to Rs 1,790, from the previous target of Rs 1,800 per share.

The fall in US exports was related to lower supplies of Enoxaparin. While the issue is expected to improve in the fourth quarter, this setback could lead to a stronger product mix, potentially boosting the company’s gross margin year-on-year, Nomura said.

The performance of Cenexi, the French contract development and manufacturing organisation that Gland Pharma acquired, is expected to show improvement. Analysts predict Cenexi’s sales and Ebitda margins will improve quarter-on-quarter and near breakeven levels by the end of FY25.

Nomura has also adjusted its earnings forecasts for Gland Pharma, reducing its FY25 earnings per share estimate by 7.3%, and lowering its FY26 and FY27 EPS estimates by 4.6% and 4.0%, respectively. Despite these cuts, the brokerage continues to forecast strong Ebitda margin expansion over the next few years, supported by factors such as currency depreciation, volume increases, and opportunities in the GLP-1 drug market.

The stock has struggled over the past year, underperforming the broader market and the Nifty Pharma index. It has dropped by 13% compared to the Nifty 50’s 8% gain and Nifty Pharma’s 28% gain, as per the brokerage.

Share price of Gland Pharma rose as much as 1.22% before paring gains to trade 0.91% higher at Rs 1,691 apiece, as of 9:17 a.m. This compares to a 0.25% advance in the NSE Nifty 50.

The stock has fallen 10.25% in the last 12 months. The relative strength index was at 38.

Out of 16 analysts tracking the company, eight maintain a 'buy' rating, two recommend a 'hold' and six suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 16.2%.