This pharma stock surges 10% post 33% fall in two sessions

Snapping a two-session losing streak, shares of Gland Pharma rallied nearly 10% in intraday trade on Tuesday as investors rushed to buy a beaten-down stock that lost more than 33% in value in the last two trading days. The stock has fallen nearly 27% from ₹1,338 levels as on May 18, 2023, after the pharma company released its fourth-quarter earnings.

On Tuesday, Gland Pharma shares opened 2.4% higher at ₹915 against the previous closing price of ₹893.50 on the BSE. Extending opening gains, the pharma stock gained as much as 9.6% to hit an intraday high of ₹979, while the market capitalisation climbed to ₹15,635 crore. On the volume front, as many as 1.4 lakh stocks changed hands over the counter as compared to the two-week average volume of 0.84 lakh stocks.

The share price of Gland Pharma touched a 52-week low of ₹861.5 in intraday trade on Monday amid a sharp sell-off in two sessions. On Monday, the stock ended 16.6% lower after eroding 20% on Friday.  

At the current price level, Gland Pharma shares are 69% lower than its 52-week high of ₹3,176.75 touched on May 23, 2022. The midcap stock has lost 68% in a year; 44% in six months; and over 27% in a month. In the calendar year 2023, the counter has fallen nearly 40%.

As per the exchange data, Morgan Stanley Investment Funds Emerging Markets Equity Fund sold 9,60,271 equity shares in bulk deal at a weighted average price of ₹930.69 apiece on NSE, amounting to ₹89.37 crore.

The recent sell-off in Gland Pharma shares can be attributed to weak March quarter earnings. The generic injectable-focused company reported a 72% decline in net profit at ₹78.68 crore as compared to ₹285.90 crore reported in the previous quarter, dented by soft demand production shutdown at one of its facilities in Telangana. The profit was also impacted by a one-time expense of ₹56.46 crore made in relation to an impairment loss.

The revenue from operations of the Hyderabad-based company tumbled 29% YoY to ₹785 crore in Q4FY23, from ₹1,103 crore in the corresponding period last year. The revenue was impacted by shut down in the production line in Pashamylaram Penems facility due to line upgradation as well as a reduction in business from the domestic B2C division during the year as compared to the previous year.

On the operating front, EBITDA plunged 52% to ₹168.4 crore as compared to ₹348.4 crore in the same period last year. The margin also dropped to 21% from 32% in Q4FY22.

For the full financial year 2023, the profit was down 36% at ₹781 crore, while revenue fell 18% to ₹3,624.6 crore.

Srinivas Sadu, MD & CEO of Gland Pharma said, “We have formally closed the acquisition of Cenexi and welcome it to be a part of the Gland-Fosun family. This is our first overseas acquisition and our move into the next phase of growth and expansion. We made progress on our path to building a Bio-CDMO and signed our first contract for Plasma Protein at our Shamirpet facility.”

“As an important milestone we received our first China approval and have also initiated launch of our first product. Our progress on the complex portfolio is in-line with plan and this year we filed a total of 3 complex products during the year. Our priority for the next year shall be seamless integration of Cenexi along with a focus on driving sustainable business growth,” Sadu said.