This largecap pharma stock surges 32% in two days; here’s why

Shares of Gland Pharma have risen more than 32% in two sessions after it announced its June quarter earnings report. The large cap pharma stock gained 9.6% intraday trade today after hitting 20% upper circuit in the previous session amid strong volume trade. The counter has maintained an uptrend for the last five sessions and rose 37% since August 3.

Continuing its gaining streak, Gland Pharma opened higher at ₹1,640, up 1.7% against the previous closing price of ₹1,612.60 on the BSE. Extending opening gains, the pharma major climbed as much as 9.65% to ₹1,768.35 during the session so far. On the volume front, 5.5 lakh shares changed hands over the counter compared to a two-week average of 1.03 lakh stocks. The market capitalisation stood at ₹28,100 crore at the time of reporting.

Despite the recent rally, Gland Pharma shares trade 47% lower than its 52-week high of 2,606 touched on September 2, 2022.  However, the counter has more than doubled from its 52-week low of ₹861.5 hit on May 22, 2023, owing to weak March quarter earnings (Q4FY23).

In the last year, Gland Pharma has fallen over 26%, while it rose nearly 8% in the calendar year 2023. In the past six months, the share price increased by 31%, while it surged nearly 57% in a month.

On August 7, Gland Pharma released its first quarter earnings report which showed that its consolidated net profit declined by 5.3% to ₹194.1 crore as compared to ₹229.1 crore in the year-ago period. However, revenue jumped 41% to ₹1,208.6 crore against ₹856.89 crore in the corresponding period last year.

On the operating front, Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) increased to ₹294 crore versus ₹270 crore in the year-ago period. The EBITDA margin fell to 24.3%  from 31.5% in the same quarter a year ago.

The gross profit grew 57% YoY and 80% QoQ to ₹7,558 crore, while margin improved to 63% from 56% in Q1FY23 and 54% in Q4FY23. “The company has improved gross margin both on yearly and sequential basis due to improved margin from the base business U.S. portfolio and Cenexi’s margin profile,” it said in the release.

For Q1FY24, direct sale to U.S. customers was ₹548.6 crore and to Indian customers for the U.S. market was ₹53.5 crore. As per the company, Indian market accounted for 5% of Q1FY24 revenue as compared to 6% in Q1FY23, while the rest of the World market accounted for 24% of Q1FY24 revenue as against 12% in Q1FY23.

During the quarter under review, the company through its wholly-owned subsidiary in Singapore acquired 100% stake in Europe-based Cenexi Group. In the first two months post acquisition, Cenex reported revenue at ₹ 321.4 crore and EBITDA at ₹34.7 crore. In Q2 FY24, Cenexi’s facilities will be having up to 4 weeks of annual summer shutdown, the company said.

The total R&D expense for Q1FY24 was ₹45.7 crore, which was 5% of revenue from operations (excluding Cenexi). During the quarter, the company filed 5 ANDAs and received approval for 9 ANDAs. As of June 30, 2023, the company along with its partners had 337 ANDA filings in the United States, of which 270 were approved and 67 were pending approvals. The company has a total of 1,620 product registrations globally.

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