Tushar Manudhane
EUR 120.00 For Business Accounts Only

MOSL: GLAND PHARMA (Buy)-Complex products/newer markets to fortify growth pace

GLAND PHARMA: Complex products/newer markets to fortify growth pace

(GLAND IN, Mkt Cap USD8.4b, CMP INR3802, TP INR4460, 17% Upside, Buy)


Progressing well on scaling up manufacturing of the vaccine

  • GLAND’s 1QFY22 performance was ahead of our expectation, led by robust revenue growth across all geographies. It is progressing well on scaling up manufacturing of the COVID-19 vaccine. It is concurrently developing products/undertaking capex related to complex product as well as enhancing its geographical diversification.
  • We raise our FY22E/FY23E EPS estimate by 8% each to factor in: a) increased reach as well as penetration in the RoW/India markets, b) better outlook for the US market, c) higher offtake of Remdesivir/Enoxaparin, and d) continued manufacturing efficiency driving better operating leverage. We value GLAND at 35x its 12 months forward earnings to arrive at our TP of INR4,460.
  • We remain positive on GLAND due to its: a) superior ramp-up in existing products, b) healthy build-up in the complex product pipeline, c) ongoing investment in the vaccine/Biological space, and d) enough scope for inorganic growth as well. We reiterate our Buy rating.

 Strong beat on earnings led by superior revenue growth

  • Revenue grew 31% YoY to INR11.5b (est: INR9.9b) in 1QFY22. 
  • India/RoW sales rose 77%/51% YoY to INR2.3b/INR2.2b (20%/19% of sales). Sales in core markets grew 16% YoY to INR7b (61% of sales).
  • Gross margin contracted by ~1,030bp YoY to 53.5% as 1QFY21 had benefitted from niche launches. GM fell 240bp QoQ due to changes in the geographic mix.
  • EBITDA margin decreased at a lower rate (890bp YoY) to 37.8% (est. 37.1%) due to better operating leverage (employee cost/other expenses fell 120bp YoY/30bp YoY as a percentage of sales). In fact, EBITDA margin expanded 90bp on a QoQ basis.
Gland Pharma

Motilal Oswal
Motilal Oswal

​Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance. 

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

Tushar Manudhane

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