Gland Pharma shares rallied nearly 12% to Rs 1,799 in Monday's trade on BSE after the company reported a 15.7% year-on-year (YoY) decline in net profit at Rs 163.5 crore for the second quarter of FY25. In the corresponding quarter of the previous fiscal, Gland Pharma posted a net profit of Rs 194 crore.Revenue from operations increased 2.4% to Rs 1,405.8 crore against Rs 1,373.4 crore in the corresponding period of the preceding fiscal. At the operating level, EBITDA dipped 8.4% to Rs 297 crore in the second quarter of this fiscal over Rs 324.1 crore Q2 of the previous fiscal.The EBITDA margin stood at 21.1% in the reporting quarter versus 23.6% in the corresponding period in the previous fiscal.Gland Pharma reported R&D expenses amounting to Rs 49.3 crore, accounting for 4.6% of revenue. The company filed seven new abbreviated new drug applications (ANDAs) and received eight ANDA approvals during the quarter, bringing the total US ANDA filings to 363, of which 304 have been approved and 59 are pending.Following the Q2 results, Kotak Institutional Equities upgraded Gland Pharma’s rating from 'Sell' to 'Reduce' with a revised target price of Rs 1,625, up from Rs 1,460."On muted expectations, Gland reported an 8% EBITDA beat in Q2 FY25, driven by base business performance," Kotak noted. "Cenexi’s subdued performance was largely in line with our estimates. We anticipate a gradual sales recovery in both the core business and Cenexi. After a long wait, the company has made tangible progress in biologics CDMO, which marks a key development."Kotak added, "We believe Gland’s earnings have now bottomed out and have increased our target P/E multiple from 21x to 22x. We also raised our FY2025-27E EBITDA estimates by about 2% each due to higher base business margins. Rolling forward to Dec 2026 E, we derive a fair value of Rs 1,625 (previously Rs 1,460). Post the recent correction, we upgrade the stock to Reduce from Sell."(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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