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Another 52 week low for Gland Pharma after revenue, profit falls for third straight quarter

Another 52-week low for Gland Pharma after revenue, profit falls for third straight quarter

Another 52-week low for Gland Pharma after revenue, profit falls for third straight quarter
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By CNBCTV18.com Jan 24, 2023 11:26:22 AM IST (Published)

Nomura cut its price target on Gland Pharma to Rs 1,524, saying that earnings visibility remains weak, although a large part of the de-rating has played out.

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Shares of Hyderabad-based Gland Pharma Ltd., a generic injectable focused pharmaceutical company, hit another 52-week low in intraday trade on Tuesday after its revenue and profit for the December period declined for the third straight quarter.

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For the quarter, Gland Pharma's revenue declined 12 percent from last year, while the street was anticipating growth to be flat compared to last year. The management said that supply chain issues continue to impact the business.

The company also pointed out that it was facing non-availability and long lead times for several processing and primary materials since the start of the financial year. It has earlier mentioned to analysts that it will take at least six quarters for business to normalise.

Net profit for the period also declined 15 percent from last year to Rs 232 crore. The figure was lower than the estimate of Rs 264.5 crore, which would have implied a decline of three percent.
The company's EBITDA margin for the quarter stood at 30.9 percent, which was in-line with estimates. On a sequential basis, margin expanded by 290 basis points.
Gland Pharma continues to be a cash rich company, with reserves of Rs 3,825.9 crore at the end of the December quarter.
Brokerages are divided on the prospects of the company.
Incred upgraded the stock to add, saying that although the quarter was bad, the numbers are nearing a bottom.
Goldman Sachs maintained its buy rating with a price target of Rs 1,950. The brokerage said that while comfort is emerging on the margin front, the recovery in topline will only be gradual.
Motilal Oswal has also maintained its buy rating with a price target of Rs 1,700, stating that a 58 percent drop in stock price factors in the deterioration in business outlook.
However, Nomura cut its price target on Gland Pharma to Rs 1,524, saying that earnings visibility remains weak, although a large part of the de-rating has played out.
Nirmal Bang has downgraded the stock from buy to accumulate. The firm has turned cautious due to persistent supply chain issues, competition and inventory rationalisation at the client level.
IIFL also believes that the near-term pain in the stock is likely to continue and that despite the correction, valuations remain expensive.
Shares of Gland Pharma are trading 1.5 percent lower at Rs 1,355, after making an intraday low of Rs 1,308.
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