Stock of this pharma company has plunged 80% from its record high level

Shares of Gland Pharma tumbled 19 per cent to hit a new low of Rs 872.10 in Monday’s intra-day trade, in an otherwise firm market.

In the past two trading days, the stock of this pharmaceutical company declined 35 per cent after the company reported a weak set of numbers, with profit after tax (PAT) down 72 per cent at Rs 78.70 crore in the March quarter (Q4FY23). The pharmaceutical company had posted PAT of Rs 285.90 crore, in a year ago quarter.

At 11:18 AM; the stock quoted 16 per cent lower at Rs 894.90. In comparison, the S&P BSE Sensex was up 0.34 per cent at 61,940.

The stock has plunged 80 per cent from its all-time high level of Rs 4,350, which it had touched on August 12, 2021. Currently, it quoted 42 per cent lower against its issue price of Rs 1,500 per share. The company had made stock market debut on November 20, 2020.

On the earnings front, Gland Pharma's revenue declined 29 per cent year-on-year (YoY) to Rs 785 crore, due to lower offtake of key products in developed as well as domestic markets. Moreover, production line shut down in Pashamylaram Penems facility also weighed revenues. 

Meanwhile, on the operational front, Earnings before interest, taxes, depreciation and amortization (Ebitda) de-grew 52 per cent YoY to Rs 169 crore, with margins at 21.5 per cent.

Analysts at Nirmal Bang Equities said that the company reported its worst-ever Ebitda margin mainly due to negative operational leverage, which was partially offset by a better geographical mix.

That apart, one of Gland Pharma's customers has also filed for voluntary proceedings under Chapter 11 of the US bankruptcy code.

From supply issues to heightened competition, analysts cautioned against these rising issues for Gland Pharma to impact their future growth of business.

Analysts at Motilal Oswal Financial Services have slashed earnings estimate for the company by 36 per cent/22 per cent for FY24E/FY25E, factoring in reduction in scope of business from a bankrupt customer, gradual revival in business due to shift of business by another customer to alternate supplier, and reduced share of profit due to higher competition in existing product portfolio.

"While multiple headwinds on revenue and operational cost have hit its FY23 performance, we expect a slow recovery over the next 12-15 month aided by new launches in China/other regulated markets, newer contracts in CDMO segment and inventory rationalisation of existing products," the brokerage firm added.