Hold Gland Pharma Ltd For Target Rs.1,580 by Axis Securities
Base Business Faces Volume Decline; New Launches Offer Optimism
Est. Vs. Actual for Q3FY25: Revenue – INLINE ; EBITDA Margin – BEAT; PAT –BEA
Changes in Estimates Post Q3FY25
FY25E/FY26E: Revenue: -2.5%/1.0%; EBITDA Abs: 0.5%/-0.2%; PAT: 0.6%/-0.2%
Recommendation Rationale
* GLAND’s base business (Ex-Cenexi) registered an 8% YoY revenue degrowth due to lower volumes; however, EBITDA margins expanded to ~38.7%, improving by 500 bps YoY and 444 bps QoQ, exceeding expectations.
* Cenexi reported revenue of Rs 372 Cr (-16% YoY), an EBITDA loss of Rs 32 Cr, and EBITDA margins of -8.5%, impacted by unannounced inspections by ANSM. However, management expects a positive EBITDA by Q3FY26E despite near-term headwinds and has guided for revenue of 200 Mn Euro in FY26.
* The company is targeting an annual revenue growth rate of approximately 14-15%, supported by recent expansions. New launches (13 molecules in Q3FY25) are expected to drive incremental sales in the U.S., while G
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 20x for FY27E earnings (Earlier Valuation: PE 26x for FY26E)
Current TP: Rs 1,580/share (Earlier TP: Rs 1,760/share)
Financial Performance
GLAND’s base business (Ex-Cenexi) registered an 8% YoY revenue degrowth due to lower volumes; however, EBITDA margins expanded to ~38.7%, improving by 500 bps YoY and 444 bps QoQ, exceeding expectations. Cenexi reported revenue of Rs 372 Cr (- 16% YoY), an EBITDA loss of Rs 32 Cr, and EBITDA margins of -8.5%, impacted by unannounced inspections by ANSM. However, management expects a positive EBITDA by Q3FY26E despite near-term headwinds and has guided for revenue of 200 Mn Euro in FY26
The consolidated revenue stood at Rs 1,384 Cr, reflecting a decline of 10.5% YoY and 1.5% QoQ. In comparison, consolidated EBITDA margins improved to 26%, up 289 bps YoY and 483 bps QoQ, driven by a better product mix. GLAND reported a PAT of Rs 204 Cr, surpassing expectations on a YoY basis.
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SEBI Registration number is INZ00016163
