Gland Pharma - Performance In Revival Mode; Valuation Attractive: Motilal Oswal

Motilal Oswal Report

Gland Pharma Ltd. has seen an encouraging revival in its business performance in 9M FY24 after a weak FY23.

The revival in sales in the company’s core markets has been driven by new launches and the relaunch of certain products. With the resolution of supply chain issues, we believe that Gland Pharma is expected to clock a 16% compound annual growth rate in sales to Rs 33 billion compared to a modest 2% sales CAGR over FY22-24.

Gland Pharma is also working on new registrations and adding new markets in the rest of the world segment.

Further, Gland Pharma is also adding new areas of growth through the merger and acquisition and organic routes.

We value Gland Pharma at 27 times 12 months forward earnings to arrive at a target price of Rs 2,240. Considering a 20% earnings CAGR over FY24-26, significant underperformance on absolute basis (5% appreciation in past six months) as well as on relative basis (versus BSE Healthcare Index), and attractive valuation at 24 times FY26E earnings per share, we reiterate our Buy rating on the stock.

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