Gland Pharma share price target at Rs 2,340: MOFSL sees 19% upside, retains Buy

Motilal Oswal Financial Services Limited (MOFSL) has adjusted its target price for Gland Pharma to Rs 2,340, valuing the company at 33 times 12-month forward earnings. Following the robust Q1FY26 performance, Gland Pharma's EBITDA and PAT exceeded MOFSL's estimates by 13% and 16%, respectively. Such performance is attributed to the effective strategies and operational efficiencies implemented across various markets.

Gland Pharma's revenue for Q1FY26 grew by 7.4% year-on-year to Rs 1,500 crore, aligning closely with MOFSL's estimate of Rs 1,520 crore. The company's EBITDA increased significantly by 39% year-on-year, reaching Rs 370 crore, surpassing the estimate of Rs 330 crore. This growth highlights the company's capability to efficiently leverage its resources, ensuring consistent returns for stakeholders.

The company's adjusted PAT witnessed a robust 50% year-on-year growth to Rs 215 crore, compared to MOFSL's projection of Rs 190 crore. This growth is attributed to traction in international markets, including Europe, Canada, Australia, and New Zealand, alongside improved operational efficiencies at Cenexi. Strategic expansion into these regions has driven the company's profitability.

MOFSL has increased its earnings estimates for Gland Pharma by 9% for FY26 and 3% for FY27, citing the scale-up of GLP-1 products and potential launches in the US and EU markets. Additionally, a faster turnaround at Cenexi is anticipated to contribute to future growth. These initiatives are likely to strengthen the company's market presence and competitive edge. MOFSL's target price for Gland Pharma suggests a 19% potential upside ahead.

Despite moderate core market sales due to lower off-take of Enoxaparin, new product launches across key markets are anticipated to enhance future market outlook. MOFSL projects a compounded annual growth rate (CAGR) of 14% in revenue, 20% in EBITDA, and 27% in PAT over FY25-27. The company's focus on innovation and strategic partnerships is expected to play a crucial role in sustaining this growth trajectory.

The gross margin expanded by 560 basis points year-on-year to 65.4%, attributed to a reduction in the cost of finished goods and a favourable change in product mix. The EBITDA margin also expanded by 560 basis points to 24.4%, exceeding MOFSL’s estimate of 21%. This improvement underscores the company's operational efficiency and capability to manage costs effectively.

Gland Pharma has been facing challenges over the past three years due to increased competition and operational losses at Cenexi. However, the company is reinforcing its position in the complex injectable space through in-house product development and partnerships. These efforts aim at mitigating risks and ensuring long-term sustainability.

Strategic initiatives, coupled with steady price erosion in the base portfolio and new product introductions across major markets, are expected to drive a 20% earnings CAGR over FY25-27. MOFSL maintains a 'BUY' rating on the stock, reflecting confidence in Gland Pharma's growth prospects. The company's proactive approach in addressing market challenges and capitalising on opportunities is forecasted to yield positive outcomes in the upcoming years.