Shares of Gland Pharma slipped 5 per cent to Rs 1,437.70 on the BSE in Tuesday’s intra-day trade after the company’s revenues de-grew 10 per cent year-on-year (YoY) to Rs 1,384 crore in the December quarter (Q3FY25). The company’s topline was impacted by the low base business arising due to a dip in volumes in the US as well as some shipment delays to Saudi Arabia.
In comparison, the BSE Sensex was up 0.3 per cent at 77,417, at 10:40 AM. The stock price of Gland Pharma had hit a 52-week low of Rs 1,413.75 on January 28, 2025. It has corrected 35 per cent from its 52-week high level of Rs 2,220.95 touched on August 6, 2024.
The company’ reported earnings before interest, tax, depreciation and amortisation (Ebitda), on the other hand, grew 1 per cent YoY to Rs 360 crore, and margins stood at 26 per cent (300 bps growth) driven by a strong 535 bps improvement in gross profit margin. Profit after tax grew 7 per cent YoY to Rs 204.7 crore.
In the base business, the US de-grew 12 per cent YoY to Rs 713.5 crore due to a postponement of supplies of blood thinner, Enoxaparin to the next quarter. Rest of world (RoW) reported 6 per cent YoY growth to Rs 167 crore, while the domestic business de-grew 26 per cent YoY to Rs 56 crore. The Cenexi business remained impacted due to machinery breakdown in a Belgium plant and to address observations emanating from an unannounced inspection by the French regulator.
On a negative note, the company’s management now expects the Cenexi turnaround to happen in Q3FY26F (vs. Q4FY25F earlier), given the Lyophilizer breakdown at the Belgium plant and the observations received for the Fontenay, Belgium, plant from the French health authorities at the recent inspection.
ICICI Securities said Gland’s base business revenues were negatively impacted by the postponement of Enoxaparin revenues to the next quarter but this had positive implications on the margins as Enoxaparin fetches lower margins. The Cenexi business was also impacted by unforeseen events, however the postponement of positive margins (Ebitda) to Q3FY26 is a matter of slight concern.
That said, the brokerage firm expects normalcy to return in a quarter or two. The future holds good for Gland with the expected approvals for complex products , GLP 1 contract signing and an agreement with a Chinese biotech player for biosimilars besides incremental Cenexi revenues from the new high-speed line from Fontenay plant. The new CEO has been assigned to take charge of RoW and India businesses, ICICI Securities said in a note.
Analysts at InCred Equities said they are disappointed with the repeated delay in Cenexi’s turnaround and will reassess the situation constructively once the facility is back on track. It has been nearly seven quarters since Cenexi’s acquisition, and it will take another three-to-four quarters for the business to normalise, they said.
While Gland’s core business continues to outperform, Cenexi’s ongoing challenges will remain a drag in the near-term. As a result, the brokerage firm has reduced its FY25F/26F EPS estimates by 14 per cent/24 per cent, respectively, and lowered the target price to Rs 1,313, from Rs 1,768 earlier. A faster-than-expected ramp-up at Cenexi remains a key upside risk, the brokerage firm said in the company’s results update.
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