"Gland Pharma 2QFY23 sales was inline with our estimates but EBITDA/PAT was 13% below. EBITDA margins were depressed on lower gross margin in RoW market, continued high freight costs, increase in employee expense and one-offs. In our view, supply chain challenges will continue to pose growth and margin headwinds in near term with no clarity of resolution," said global brokerage Jefferies.
The brokerage house has downgraded its rating to Hold on Gland Pharma shares with a target price of ₹2,241 apiece. “Given the near-term top-line growth and margin headwinds, we downgrade the stock to Hold from Buy rating."
Gland Pharma said revenue from its core markets of US, Europe, Canada and Australia grew by 3%, however, India revenue was down 42% while the same for the 'rest of the world' market was also down 3%.
“Gland Pharma’s 2QFY23 results were a mixed bag; while revenue was better than estimate mainly due to a sharp recovery in RoW revenue, margins were lower than our and consensus estimates. The management has also withdrawn FY23 guidance mainly due to cost inflation," said Nirmal Bang in a note while maintaining Buy tag on the pharma stock with a target price of ₹2,582.
“Sharp improvement in RoW growth was mainly on the back of strong growth in the MENA region as well as improvement in supply of raw materials. The company has also built an additional RM inventory besides securing alternative supplies to mitigate RM supply issues in future. The management expects cost inflation to continue to affect near term margins. Margins are also expected to improve with operational leverage and normalization of cost inflation," the brokerage added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
