Buy Gland Pharma; target of Rs 2340: Motilal Oswal

Motilal Oswal's research report on Gland Pharma

Gland Pharma (GLAND) posted revenue in line with our estimate in 1QFY26. However, EBITDA/PAT exceeded our estimates (13%/16% beat). Strong traction in Europe, Canada, Australia, NZ and the rest of the world, along with better operational efficiency at Cenexi, led to improved performance for the quarter. After four quarters of earnings decline, GLAND delivered strong 50% YoY growth in earnings for the quarter. Strong 20% YoY growth in Cenexi revenue led to improved operating leverage, driving EBITDA break-even in 1QFY26. The profitability is expected to further improve 2HFY26 onward.

Outlook

We raise our earnings estimates by 9%/3% for FY26/FY27, factoring in a) scale-up of GLP-1 products in other core markets, b) faster turnaround of Cenexi and c) potential launches in the US/EU. We value GLAND at 33x 12M forward earnings to arrive at a TP of INR2,340.