Gland Pharma jumps 7% intraday despite weak Q3 performance; brokerage sees 26% upside

Despite weak Q3 earnings, Gland Pharma shares are among the top gainers on the exchanges today. The stock touched a day’s high level of Rs 1452.8 per share, after surging for more than 7 per cent on the BSE during Wednesday’s session. It, however, surrendered the gains tacking weak sentiment in the domestic market to trade in negative bias around 3 PM.

The buying sentiment in stock can mainly be attributed to improved gross and net margins sequentially in the December quarter despite weak revenue, as per YES Securities.

The mid-cap pharma company reported a weak quarter on declining US revenues year-on-year (YoY) as lack of customer offtake, still lingering supply concern and company opting margin over market share led to revenue shortfall, YES Securities lead analyst Bhavesh Gandhi said in a report.

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The brokerage expects another lackluster quarter in Q4 with traction in the US being back-ended in FY24 and the cut the target price to Rs 1,720 per share (26% upside) from Rs 3,060 per share earlier, given the lack of near-term triggers.

The brokerage tagged Buy rating on the stock mainly on the strong commentary from management. “FY24 should see growth coming back and believe the current environment is a temporary situation and not looking at refashioning of business model,” the management said.

Gland Pharma: Mutual Funds’ Favourite

The Mutual Fund houses have increased their holdings in Gland Pharma from 18.48 per cent to 19.49 per cent in December 2022 quarter. More than half a dozen MF firms have stakes in the company. Kotak MF, Aditya Birla Sun Life MF, UTI, Nippon Life, Axis Mutual Fund, ICICI Prudential and Mirae Asset Management have up to 4 per cent holding in the stock.