Motilal Oswal Maintains 'Buy' on Gland Pharma with Rs 2,310 Target, Cites Strong Pipeline and Expansion

Motilal Oswal maintains a 'Buy' recommendation for Gland Pharma, with a target price of Rs 2,310, suggesting a potential upside of nearly 17%. The brokerage acknowledges that Gland Pharma's performance in the second quarter of FY26 was mixed. While revenue met expectations, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) and Profit After Tax (PAT) fell short by 9% and 11% respectively. This shortfall was attributed to a lower-than-expected share of milestone income and a weaker contract manufacturing (CMO) business in certain international markets.

However, Motilal Oswal anticipates a rebound in growth for Gland Pharma in the upcoming quarters. Key growth drivers identified include a strong product pipeline and the strategic development of limited-competition products. The brokerage also highlights the company's progress in expanding its manufacturing capabilities. Upgrades at the Cenexi facility and the addition of new lyophiliser lines are on schedule and are expected to boost production and revenue starting next quarter.

Furthermore, Gland Pharma is actively strengthening its position in the lucrative GLP-1 drug segment, which is used for treating diabetes and obesity. The company is employing a dual strategy of acquiring new customers and expanding its peptide manufacturing capacity to meet future demand in this area.

Based on these factors, Motilal Oswal forecasts Gland Pharma to achieve a Compound Annual Growth Rate (CAGR) of 13% in sales, 18% in EBITDA, and 24% in profit between FY25 and FY28. The target price of Rs 2,310 is derived from valuing the company at 33 times its 12-month forward earnings.

Impact: This news is likely to positively influence Gland Pharma's stock price and investor sentiment, reinforcing confidence in its growth prospects and strategic initiatives, particularly in the high-demand GLP-1 segment. The projected growth rates and expansion plans could attract further investor interest in the pharmaceutical sector. Rating: 8/10

Difficult Terms: * EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance before accounting for non-operating expenses like interest and taxes, and non-cash expenses like depreciation and amortization. * PAT (Profit After Tax): The net profit of a company after all expenses, including taxes, have been deducted. * CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specified period longer than one year, assuming that profits were reinvested at the end of each year. * GLP-1 drugs: Glucagon-like peptide-1 receptor agonists, a class of medications primarily used to treat type 2 diabetes and, more recently, for weight management. * Lyophiliser: A device used for freeze-drying, a process that removes water from products by freezing them and then sublimating the ice under vacuum, increasing shelf life and preserving efficacy. * CMO (Contract Manufacturing Organisation): A company that provides manufacturing services for other firms.