Buy Gland Pharma Ltd For the Target Rs.2,170 by Axis Securities Ltd
Poised for Stronger H2 Momentum; Rating Upgraded to BUY
Est. Vs. Actual for Q2FY26: Revenue – INLINE; EBITDA – MISS; PAT – MISS
Changes in Estimates Post Q2FY26:
FY26E/FY27E: Revenue: 2.2%/1.2%; EBITDA Abs: 2.2%/1.2%; PAT: 5.3%/3.6%
Recommendation Rationale
* Stable Core and Cenexi Turnaround Drive Revenue Growth: Gland Pharma reported consolidated revenue of Rs 1,487 Cr in Q2FY26, marking a 5.8% YoY growth, in line with our estimates. The base business (ex-Cenexi) grew by 1.1% YoY, while Cenexi delivered a strong turnaround, reporting 20.7% YoY growth, sustaining the momentum of recovery and successful integration.
* Cenexi: Cenexi reported Q2FY26 revenue of Rs 410 Cr, with operational loss of Rs 62 Cr as the unit was impacted by the annual maintenance shutdown. Management is confident in establishing a sustainable growth trajectory and remains on track to improve EBITDA in Q3FY26. It expects to achieve positive performance with a target revenue of around €50 Mn. Additionally, Cenexi has secured 4 new project wins.
* GLP-1 Opportunity: Gland Pharma has already secured three contracts related to GLP-1 products, with its current 40 Mn-unit cartridge capacity almost fully utilised by these initial agreements. Management further indicated that the company is in advanced discussions to sign two additional GLP-1 contracts, which will be announced once finalised. The existing contracts include supplies for the partnered gLiraglutide product and planned gSemaglutide supplies, which will commence after partners obtain regulatory approvals in new markets such as Canada and India. To meet surging global demand for pen-based injectable therapies, Gland is expanding total GLP-1 capacity from 40 Mn to 140 Mn units
Sector Outlook: Positive
Company Outlook & Guidance: Management reiterated that Gland Pharma is on track to deliver mid-teens revenue growth in FY26, with H2 expected to be stronger, driven by new launches and volume recovery. The consolidated EBITDA margin is expected to remain stable at 24–25% for the year. Growth is supported by four key levers — (1) new launches like Dalbavancin in H2, (2) strong base business profitability with 37% adjusted EBITDA margin (ex-Cenexi), (3) Cenexi’s turnaround to EBITDA positive in Q3, and (4) investments in complex injectables and CDMO platforms, including GLP-1 capacity expansion from 40 Mn to 140 Mn units by Mar/Apr’26 and biologics CDMO scale-up from 8 kL to 23 kL.
Current Valuation: PE 27x for H1FY28E earnings. (Earlier 26x/FY27E)
Current TP: Rs 2,170/share (Earlier TP: Rs 1,950/share)
Recommendation: We revise our rating from HOLD to BUY.
Financial Performance
Gland Pharma delivered a resilient Q2FY26 performance with consolidated revenue of Rs 1,487 Cr, up 5.8% YoY, supported by steady demand across regulated markets and CDMO momentum. EBITDA grew 5.6% YoY to Rs 314 Cr, with margins stable at 21.1%, while Adjusted EBITDA rose 13% YoY to Rs 336 Cr (23% margin) after excluding ESOP and one-off GST provisions. PAT increased 12% YoY to Rs 184 Cr (12% margin). The base business (ex-Cenexi) remained the key profit driver, delivering an Adjusted EBITDA margin of 37%, aided by a favourable product mix and operational efficiencies.
The U.S. business grew 10% YoY, while Europe (including Cenexi) expanded 16% YoY, driven by a recovery in project execution. Cenexi’s revenue grew 21% YoY (in € cc terms) to Rs 410 Cr, though margins were temporarily impacted by a planned shutdown for maintenance and upgrades.
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SEBI Registration number is INZ000161633
