Gland Pharma Q4 Results Review - Superior Execution In The Base Business: Motilal Oswal

Motilal Oswal Report

Gland Pharma Ltd. posted lower than expected Q4 FY24 earnings. Weak Cenexi performance dragged down overall profitability for the quarter. Having said this, Gland Pharma continued to exhibit strong traction in the base business (ex-Cenexi) aided by relaunches that went off-market due to issues at its partner’s end.

We cut our earnings estimates by 11%/9% for FY25/FY26, factoring in:

1. the extended operational challenges,

2. slower progress in the China business, and

3. a higher effective tax rate.

We value Gland Pharma at 27 times 12 months forward earnings to arrive at our target price of Rs 2,070. Reiterate Buy.

While Gland Pharma is implementing efforts to turnaround the Cenexi business, it has not only stabilised its base business but also built levers in terms of product pipeline/newer contracts to further scale-up the base business.

It is also focusing on obtaining regulatory approvals for its biologics facility for subsequent scale-up of the business. Accordingly, we expect 11%/17%/20% CAGR in revenue/Ebitda/profit after tax over FY24-26 to Rs 70 billion/Rs 18.5 billion/Rs 11.2 billion.

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