During Tuesday’s trading session, the shares of a generic injectable-focused pharmaceutical company surged nearly 12.4 percent to Rs. 1,810 on BSE, after the company reported Q2 FY25 results as well as a positive future outlook.
With a market cap of Rs. 29,770.6 crores, at 11:00 a.m., the shares of Gland Pharma Limited were trading in the green at Rs. 1,807, up by nearly 12.3 percent, compared to its previous closing price of Rs. 1,609.85.
What’s the news:
The fluctuations in the share prices were observed after Gland Pharma Limited announced the financial results for Q2 FY25, through the latest filings with the stock exchanges on Monday post-market hours.
For Q2 FY25, Gland Pharma reported consolidated revenue from operations of Rs. 1,406 crores, reflecting a marginal growth of around 0.3 percent QoQ from Rs. 1,402 crores in Q1 FY25, as well as an increase of about 2.4 percent YoY from Rs. 1,373 crores in Q2 FY24.
The company’s net profit for Q2 FY25 grew to Rs. 164 crores, representing a significant increase of around 14 percent QoQ from Rs. 144 crores in Q1 FY25, but a year-on-year decrease of nearly 15.5 percent from Rs. 194 crores in Q2 FY24.
In terms of EBITDA, Gland Pharma posted an increase from Rs. 2,654 crores in Q1 FY25 to Rs. 2,961 crores in Q2 FY25, reflecting a growth of about 12 percent QoQ. However, the EBITDA declined by 8 percent YoY compared to Rs. 3,205 crores in Q2 FY24.
The company’s EBITDA margin for Q2 FY25 stood at 21 percent, a decline from 23 percent in Q2 FY24, though it improved from 19 percent in Q1 FY25. This overall EBITDA margin was affected by Cenexi Group, a wholly-owned subsidiary of Gland Pharma Limited.
Business Highlights:
In Q2 FY25, Gland Pharma incurred a total capital expenditure (Capex) of Rs. 103.7 crores. Research and Development (R&D) expenses amounted to Rs. 49.3 crores, representing 4.6 percent of the company’s revenue.
Further, of the nine products planned for the Chinese market, four are currently in development, while five have already received regulatory approvals.
During the quarter, Gland Pharma entered into a binding term sheet with
Dr. Reddy’s Laboratories to form a strategic alliance for the biologics Contract Development and Manufacturing Organization (CDMO) business.
This partnership will leverage Gland’s cutting-edge biologics manufacturing facility located in Genome Valley, Hyderabad. The company is optimistic about the potential of this partnership to drive mutual value and anticipates finalising a definitive agreement in the near future.
Management Guidance:
Despite facing near-term challenges, Gland Pharma remains focused on achieving its short-term objectives, including delivering a positive EBITDA for Q4 FY25.
Looking ahead, the company maintains its target of a positive EBITDA for the next fiscal year, driven by revenue growth exceeding the €200 million threshold.
Brokerage Target:
Trade Brains has initiated a ‘buy’ rating on Gland Pharma Limited and assigned a target price of Rs. 3,300 per share, representing a potential upside of nearly 86 percent from the current trading price of Rs. 1,771.7.
Trade Brains maintains a positive outlook on the company, driven by improved cash conversion, largely due to reduced inventory levels.
Additionally, the firm is optimistic about the strong growth prospects for Cenexi Group, a wholly-owned subsidiary of Gland Pharma Limited.
This growth is further supported by the revenue potential from recent product launches, including the introduction of Gland Pharma’s first complex injectable product, the generic drug “Eribulin Mesylate,” which is used in the treatment of breast cancer.
Shareholding Pattern:
As per the September 2024 shareholding pattern, the Promoters hold a 51.83 percent stake in the company, Foreign Institutional Investors (FII) hold a 4.48 percent stake, while Retail Investors and Domestic Institutional Investors (DII) hold an 8.33 percent and 35.37 percent stake in Gland Pharma, respectively.
Stock Performance:
The stock has delivered positive returns of nearly 14.5percent in one year, and around 5.8 percent of positive returns in the last six months. However, so far in 2024, the shares of Gland Pharma have given negative returns of about 5.4 percent.
About the company:
Established in 1978 in Hyderabad, Gland Pharma Limited operates primarily under a business-to-business (B2B) model and is engaged in the development, manufacturing, and marketing of sterile injectables.
The company has a wide range of injectables, including vials, ampoules, pre-filled syringes, lyophilized vials, dry powders, infusions, oncology, and ophthalmic solutions, and also enjoys the distinction of having pioneered Heparin technology in India.
Written by Shivani Singh
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