Buy This Pharma Stock For High Returns, Company's India Sales Up Sharply By 137%: Motilal Oswal

Acknowledged brokerage firm Motilal Oswal suggests buying the stocks of Gland Pharma, for good returns in the short term. Mentioning the expected up-gradation of the stock, the brokerage firm stated, "Based on its launch momentum, filing pace, the upside from recently launched products in the US, and the new Enoxaparin contract, we expect a 15% sales CAGR in the core markets over FY22-24."

Gland Pharma: Target Price, CMP, and performance

The Current Market Price (CMP) of Gland Pharma is Rs. 3,096. Motilal Oswal has estimated a Target Price for the stock at Rs. 3,700. Stock is anticipated to give a +20% return, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 3,096
Target Price	Rs. 3,700
1 year return	20.00%

Gland Pharma has shown an in-line Q4FY22 performance. India/Rest of the World (RoW) markets led revenue growth in 4QFY22. The company's revenue has increased by 24% YoY to Rs. 11b, and Sales from India/RoW/core markets have increased by 137%/32%/8% YoY to Rs. 2b/ Rs. 1.9b/ Rs. 7.1b (18%/17%/65% of sales). However, gross margin has contracted by 530bp YoY to 50.6% due to changes in the geographic mix. EBITDA margin contracted by 530bp YoY to 31.6% due to an inferior gross margin. Gland Pharma's EBITDA margin contracted by 530bp YoY to 31.6% due to an inferior gross margin. On the other hand, its Adjusted PAT grew at a higher rate (~10% YoY) to Rs. 2.9b, aided by higher other income and slightly lower tax, and EBITDA grew at a moderate rate of 6% YoY to Rs. 3.5b.

Motilal Oswal: Advantages and risks of the stock

Maintaining the buy rating for the stocks of Gland Pharma, Motilal Oswal has mentioned, "We remain positive on GLAND, given: the considerable scope to increase market share in existing products; its enhanced capabilities in peptides, hormones, long-acting injectables, delivery systems, Biologics; its consistent and successful compliance track record; and d) inorganic growth opportunities." In Q4FY22, the company has reported considerably good performance, its sales/EBITDA/PAT grew 27%/16%/21.5% YoY to Rs. 44b/ Rs. 15.1b/ Rs. 12.1b in FY22. Gland Pharma has also had 5% of its revenues from new launches in FY22. The company's core market sales grew ~16% YoY to Rs. 29b in FY22, accounting for 66% of sales, according to the recent report.

However, stating the risks of the stock, the brokerage firm said, "We reduce our FY23/FY24 EPS estimate by 6% each to factor in the extended impact of a syringe shortage; increased operational cost on account of higher power charges, freight cost, and packaging cost; Covid-led delays in approvals for the China market, offset to some extent due to increased captive sourcing of APIs."

About the company: Gland Pharma

A holistic objective of dispensing health through a portfolio of injectable products across various therapeutic segments and delivery systems has helped the company expand to 7 manufacturing facilities in India, with a capacity of approximately 750 million units. These include four facilities with 22 production lines for finished formulations and 3 Active Pharmaceutical Ingredient (API) facilities. They are present in sterile injectables, oncology and ophthalmic segments, and focus on complex injectables including NCE-1s, First-to-File products and 505(b)(2) filings. The company has remained on track to develop a complex product pipeline and build manufacturing infrastructure to support commercialization. The reputed pharma player is utilizing all levers - geographic expansion, new product launches, and volume expansion - to grow the RoW market business.

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Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.