Gland Pharma Q3 Results Review - Core Markets Business Drive Earnings: Motilal Oswal

Motilal Oswal Report

Gland Pharma Ltd. delivered operationally better-than-expected performance in Q3 FY24. Gland Pharma had robust traction in its core markets. This was, however, offset to some extent by its inferior performance in rest of the world markets. Higher depreciation and tax rates led to lower-than-expected earnings for Q3 FY24.

We cut our FY24 earnings estimates by 5% to factor in -

1. A gradual improvement in the profitability of Cenexi, and

2. A subdued sales outlook for the India business over the near term.

We value the company at 27 times 12 months forward earnings to arrive at our target price of Rs 2,240.

Gland Pharma is implementing efforts to strengthen its base business in the core markets through product launches as well as improving off-take of its existing products.

Further, it is also in process to enhance its sales prospects and the profitability of its acquired business (Cenexi). Accordingly, we expect a 20% earnings compound annual growth rate over FY24-26. Reiterate 'Buy'.

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