Gland Pharma Share Price Drops 9% After Weak Q1 Earnings

Shares of Gland Pharma plunged nearly 9% in early trading on August 7 following the release of disappointing earnings for the fiscal first quarter.

By 10:43 am IST, Gland Pharma shares were trading at ₹1,040.05 on the NSE, having recovered more than half of the day's earlier losses from a low of ₹1,911.05.

The company's net profit fell by 26% year-on-year to ₹143.8 crore in the April-June quarter, primarily due to a decrease in milestone income. Additionally, Motilal Oswal Financial Services attributed part of the Q1 FY25 performance dip to European customers delaying product uptake.

Revenue increased by 16% to ₹1,401.7 crore compared to ₹1,208.7 crore in the same period last year. Despite this growth, Gland Pharma's operational performance suffered.

The EBITDA margin shrank by 550 basis points year-on-year to 18.9%, which Nomura attributed to lower revenue growth and milestone income.

Nomura also noted a loss of momentum for Gland Pharma in Q1 after four consecutive quarters of recovery. As a result, Nomura downgraded the stock to 'reduce' with a price target of ₹1,819, indicating a potential downside of around 14% from the previous close.

Furthermore, Gland Pharma's wholly-owned subsidiary, CDMO player Cenexi, continued to incur EBITDA losses following its acquisition in January 2023. Looking ahead to Q2 FY25, Gland Pharma expects reduced activity levels for Cenexi due to the European holiday season and planned summer maintenance shutdowns, including an extended three-week shutdown at the Fontenay plant for a new ampoule line installation.

Gland Pharma anticipates a gradual increase in Cenexi's revenue towards the last quarter of FY25, with revenue normalization expected in FY26, reaching a 50 million euro quarterly run-rate. Given that Cenexi's ramp-up and breakeven point are still several quarters away, Incred Equities maintained its 'reduce' recommendation on the stock with a price target of ₹1,768.

Despite these challenges, Gland Pharma is working to rejuvenate its biologics-based contract manufacturing business, develop a robust product pipeline for the US market, and enhance Cenexi's scale and profitability. Favorable regulatory developments in the industry are also expected to improve the company's business prospects, according to MOFSL. Based on these efforts, MOFSL maintained its 'buy' rating for the stock, with a target price of ₹2,440.

Gland Pharma Ltd (Gland Pharma), a subsidiary of Shanghai Fosun Pharmaceutical (Group) Co Ltd, specializes in the development and manufacture of active pharmaceutical ingredients. Their product range encompasses injectables, prefilled syringes, vials, ampoules, ophthalmic solutions, lyophilized vials, long-acting injectables, suspensions, and hormonal products.

Some of their notable offerings include heparin sodium injection, enoxaparin sodium injection, rocuronium bromide injection, and daptomycin injection. Gland Pharma’s therapeutic portfolio spans several categories, such as anti-infectives, anesthetics, anticoagulants and their antidotes, anti-malarial drugs, cardiology medications, fertility supplements, and antagonists. 

The company's manufacturing facilities are situated in Hyderabad and Visakhapatnam, India, with its headquarters based in Hyderabad, Telangana, India.