Gland Pharma shares rally 12% after Q1FY27 profit jumps 47% YoY. Should you buy, sell or hold?
The stock, however, faced a cautious view from Elara Securities, which downgraded Gland Pharma to ‘Accumulate’ from ‘Buy’ while raising its target price to Rs 2,956. The brokerage said the downgrade followed a nearly 40% rally in the stock over the past three months, limiting the scope for further upside.
Gland Pharma reported a consolidated net profit of Rs 317 crore for Q1FY27, up 47% year-on-year from Rs 216 crore in the corresponding quarter last year.
Revenue from operations rose 20% year-on-year to Rs 1,800 crore, compared with Rs 1,506 crore in Q1FY26.
During Q1FY27, Gland Pharma’s quarterly R&D investment stood at Rs 77.2 crore, while adjusted EBITDA increased 37% year-on-year. The adjusted EBITDA margin stood at 28%.
The company’s CDMO business contributed 50% of total revenue and recorded 20% year-on-year growth during the quarter. The B2B business accounted for the remaining 50% of revenue and grew 19% year-on-year.
Commenting on the results, Srinivas Sadu, Executive Chairman of Gland Pharma, said the company’s strong start to FY27 reflected the successful execution of its CDMO strategy and the resilience of its B2B business model.He said growth during the quarter was supported by recent product launches from the CDMO portfolio and strong customer demand for the company’s diversified product mix. The company continues to strengthen its growth platform through a robust CDMO pipeline, investments in differentiated technologies and capacity expansion, he added.
Elara Securities: Strong Q1, but Valuation Limits Upside
Elara Securities said Gland Pharma’s Q1FY27 performance was better than expected. While revenue was broadly in line with its estimates, stronger margins resulted in EBITDA coming in 8% above estimates, while profit after tax was 11% ahead of expectations.
According to the brokerage, momentum in Gland Pharma’s US business, which had started improving over the past two to three quarters, remained strong during Q1FY27. The regulated markets business also benefited from new complex product launches and new contracts for existing products.
Elara noted that Cenexi remained EBITDA-positive despite reporting a flat year-on-year performance in revenue.
The brokerage said management retained its 12-13% constant-currency growth guidance for FY27, which is broadly in line with its estimates. However, it believes management’s expectation of a 20% revenue CAGR over the next four years appears optimistic, even after factoring in the momentum from new CDMO opportunities.
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Elara has raised its core FY27-FY29 earnings-per-share estimates by 5-10%, factoring in improved margins and faster growth in the CDMO segment. Nevertheless, following the stock’s nearly 40% rally over the past three months, the brokerage sees relatively limited near-term upside.
As a result, Elara Securities has downgraded Gland Pharma to ‘Accumulate’ from ‘Buy’, while raising its target price to Rs 2,956.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
