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Uptick in Margins; Strong Launch Momentum 
 

Est. Vs. Actual for Q1FY26: Revenue: INLINE; EBITDA Margin: INLINE; PAT: BEAT

Changes in Estimates Post Q1FY26

FY26E/FY27E: Revenue: 0.6%/1.1%; EBITDA Abs: 2.2%/1.9%; PAT: 2.6%/2.3%

Recommendation Rationale

Stable Core and Cenexi Turnaround Drive Revenue Growth: Gland Pharma reported consolidated revenue of Rs 1,506 Cr in Q1FY26, marking a 7.4% YoY growth, in line with our estimates. The base business (ex-Cenexi) grew by 2.7% YoY, while Cenexi delivered a strong turnaround, reporting 19.6% YoY growth, highlighting early signs of recovery and successful integration.

Cenexi Achieves EBITDA Breakeven: Cenexi reported Q1FY26 revenue of Rs 465 Cr, with a positive EBITDA of Rs 9 Cr and a margin of 2%. We expect  Cenexi to deliver 5-6% Margins in FY26.

GLP-1 Opportunity: Gland Pharma is targeting the sale of 20 Mn GLP-1 cartridges in the near term, with contract manufacturing pricing expected in the range of $1–2 per unit. This could translate into revenue of over Rs 300 Cr. To support future demand and scale-up, the company is expanding its GLP-1 cartridge and pen device capacity significantly from the current 40 Mn units to 140 Mn units.

Sector Outlook: Positive

Company Outlook & Guidance: The company remains optimistic about volume recovery and future growth, driven by new product launches and a strategic focus on biologics and complex products. Continued investment in biosimilars and RTU technologies is expected to support long-term growth.

Current Valuation: PE 26x for FY27E earnings; ( Earlier: 22x/FY27E)

Current TP: Rs 1,950/share; ( Earlier TP: Rs 1,580/share)

Recommendation: HOLD

Financial Performance

GLAND’s base business (Ex-Cenexi) registered 2.7% YoY revenue growth driven by volume growth and new launches. EBITDA margins expanded to ~34.5%, improving by 550 bps YoY and meeting expectations. Cenexi reported revenue of Rs 465 Cr (19% YoY), achieving first-time EBITDA breakeven with Rs 9 Cr and EBITDA margins of 2%. The company is targeting an annual revenue growth rate of approximately 14-15%, supported by recent expansions. New launches (12 molecules in Q1FY26) are expected to drive incremental sales in the U.S.

The consolidated revenue stood at Rs 1,506 Cr, reflecting a 7.4% YoY and a 5.7% QoQ increase. Consolidated EBITDA margins stood at 24.4%, up 555 bps YoY and flat QoQ. GLAND reported a PAT of Rs 215 Cr, above expectations of Rs 205 Cr.

Outlook

The company remains optimistic about volume recovery and future growth, driven by new product launches and a strategic focus on biologics and complex products. Continued investment in biosimilars and RTU technologies is expected to drive long-term growth.

Valuation & Recommendation

In light of the positive growth trajectory and effective cost management, tempered by the dilution impact from the Cenexi acquisition on consolidated margins and profitability, we maintain our HOLD rating on the stock with a target price of Rs 1,950/share.

Key Risks to Our Estimates and TP

• Potential USFDA inspections, resulting in the issuance of Warning Letters (WL), Official Action Indicated (OAI) status, or 483 observations, could potentially impact the company's revenue growth. • The entry of new competitors into the market might lead to heightened pricing pressures within the injectable portfolio.

• Any delays in launching Biosimilars in the market could also challenge the company's operations and growth strategy.

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