Gland Pharma share price tanked nearly 12 per cent to Rs 2,180.10 apiece intraday, fresh 52-week low, on BSE after the company posted a 35 per cent on-year decline in profit after tax (PAT) to Rs 229 crore in June quarter (Q1FY23). At close, Gland Pharma stock settled nearly 6 per cent down at Rs 2,328.85 apiece. Gland Pharma’s PAT stood at Rs 351 crore in Q1FY22. At least two research and brokerage firms — Motilal Oswal Financial Services and YES Securities are bullish on this pharma stock, and see up to 24 per cent upside potential. The company’s revenue from operations plunged 26 per cent on-year to Rs 857 crore from Rs 1,154 crore, and 22 per cent sequentially. Gland Pharma stock price has fallen below its previous low of Rs 2,421.30, hit last week. 

The stock has declined more than 30 per cent in the last three months as compared to a 3 per cent fall in S&P BSE Sensex. At current levels, the stock has plummeted 49 per cent from its all-time high level of Rs 4,350, touched on 12 August 2021. The stock was at a record low of Rs 1,701 on 20 November 2020.

Motilal Oswal Financial Services

BUY | Target Price: Rs 3,000 | Upside Potential: 21%

Analysts at Motilal Oswal Financial Services have cut EPS estimates by 14%/16% for FY23/FY24 to factor in prolonged supply chain-related issues, slowdown in India business, and higher opex. It values Gland Pharma at 33x 12M forward earnings to arrive at a price target of Rs 3,000. Motilal Oswal said that there are operational hurdles over the near term. However, given product pipeline of complex injectables, consistent compliance track record, biologics-led additional growth lever and surplus cash for any inorganic opportunity. “We believe Gland Pharma’s business model remains intact for better growth prospects over the next three years,” it said.

YES Securities

BUY | Target Price: Rs 3,060 | Upside Potential: 23.6%

YES Securities, in a report, said that its assumptions of growth have not shifted primarily as it reckons revenue declines still appear a function of component shortages and not any underlying change in demand pattern/competitive intensity. Such a shortfall also suggests less of a need to cut PE multiple especially as FY24-25 growth expectations may not have changed materially. “We cut FY23 and FY24 EPS by 24% & 22% respectively in lieu of revenue shortfall outlined above but retain 35x on FY24 earnings translating into revised TP of Rs 3,050 (earlier Rs 4,000); expect consensus EPS cuts too of similar nature,” it noted. Company expects the rest of the fiscal to show improvement in growth of high teens over last year. It said that so far demand is holding up well as volumes in several key molecules is up sharply on-year even as the impact of price erosion is fairly small at 1% for Gland for a say 10% decline at the front end. 

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