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Gland Pharma share rises 45% in three sessions, here's what brokerages say

BusinessToday.In     November 24, 2020

Share of the newly listed Chinese backed firm-Gland Pharma has given 45% return to investors since its listing on November 20.

Shares of Gland Pharma opened at Rs 2,111.20 today against the closing price of Rs 2091.85 and later hit an intraday high of Rs 2178, logging a gain of 4.12% on BSE. The pharma firm stock, however, also touched an intraday low of Rs 1960, thus, trading in a wide range of Rs 218 today. This is a steep rise from the pharmaceutical firm's issue price of Rs 1,500 apiece.

With high buying interest, Gland Pharma share price is currently is trading higher than 5, 20, 50, 100 and 200-day moving averages

Market cap of the firm rose to  Rs 32,863 crore as against Rs 29,358 crore clocked on listing day.

The Hyderabad-based firm backed by Chinese firm Fosun Pharma had launched its initial public offering (IPO) worth Rs 6,500 crore with a price band of Rs 1,490-1,500 per share from November 9-11. India's largest IPO in the pharmaceutical sector with Chinese parentage comprised fresh issue of shares aggregating up to Rs 1,250 crore and an offer for sale of up to 3.49 crore shares by existing shareholders.

Top brokerages have found the pharma firm's issue attractive, which has led the stock to rise since listing day. Further, its strong parentage from China's Fosun Pharma and healthy sales in the US market have also attracted investor interest in the stock, even after its listing.

Ambit Broking in its report submitted yesterday quoted," Gland's business model is B2B-led and generates 67% revenue from the US. Filings are split 70%/20%/10% between injectables/oncology/opthalmics. Superior compliance setup vs listed Indian generic majors drives Gland's unique capabilities.  Chinese parentage offers newer growth and RM sourcing avenues, but geopolitical issues could result in operational challenges.

The report further added," Gland's 70% US filings are sterile injectables, while the remainder is split 20/10 between oncology/opthalmics. None of the Indian generic majors boast of such a high proportion of sales being generated from complex products in the US. The company has not received any warning letters in the last five years. Meanwhile, generic majors (e.g., Cadila, Cipla, Sun) have all been red-flagged on their compliance with injectable units. Gland's business model is predominantly B2B-led."

"Gland Pharma has a proven track record of growth and profitability along with a consistent regulatory compliance history. It has never received a negative USFDA report. The future prospects are bright as it has 267 ANDA filings of which 215 are approved," said Hemang Jani, Head - Equity Strategy, Broking & Distribution, Motilal Oswal Financial Services.

HDFC Securities in its IPO note on November 10 had said," It has a consistent regulatory compliance track record and all its facilities are approved by the USFDA from whom it has had no warning letters since the inception of each facility. As of June 30, 2020, GPL along with its partners had 267 ANDA filings in the United States, of which 215 were approved and 52 were pending approval."

It added," Its manufacturing process is designed to facilitate production flexibility and deliver high and consistent product quality. Its four finished formulation manufacturing facilities with a total of 22 production lines possess the flexibility to accommodate different product requirements without the need to install new production lines. This allows the company to adapt quickly to changes in product specifications, market demand, and production requirements."

"Gland Pharma IPO the biggest pharma IPO in India got successfully listed today stock closed at 1820 up by 21.3% from issue price and up by 7.02% in intraday. In the IPO stock got a good response from Institutional as the QIB portion got subscribed 6.4 times and some lack of confidence from retail. Stock is trading above its mid-cap pharma peers but higher valuations justified by the last 3-year revenue growth and PAT growth of 27% & 55% CAGR respectively. Any dip in price can be a good opportunity for Long term investors," said Yash Gupta- Equity Research Associate, Angel Broking.

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