Gland Pharma shares rebound 10% after two-day selloff. Here's why

Gland Pharma shares rebounded 10 per cent in Tuesday's session after falling sharply in the previous two sessions after the company informed stock exchanges that the company board will be meeting Premji Invest later in the day in an one-on-one, in-person, meeting. Premji Invest is venture capital firm of billionaire Azim Premji.

The stock rose 9.56 per cent to hit a high of Rs 979 on BSE. The stock fell 16.56 per cent to settle at Rs 893.50 on Monday. This was in addition to 20 per cent drop in Gland Pharma shares on Friday. Bulk deal data showed Morgan Stanley Investment Funds Emerging Markets Equity Fund on Monday sold 9,60,271 company shares at a weighted average price of Rs 930.69 a piece on NSE, worth Rs 89.37 crore.

The stock has been under pressure as analysts argued the company has refrained from providing any guidance on revenue growth and Ebitda margin.

Nomura India has cut its earnings estimates by 15-17 per cent for FY24 and FY25 and suggested a target of Rs 1,157 on the stock. Motilal Oswal Securities slashed its earnings estimates 22-36 per cent for FY24 and FY25, 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.

"The management alluded to multiple headwinds that hit the business in Q4, including the temporary shutdown in a production line and reduced supplies to a customer that is in financial difficulty and continued price erosion in the US market. But the granular details seem unconvincing – Thus, we are not confident of a bottom emerging regarding the sustainable level of revenue/profitability," Elara Securities said.

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