Broker's call: Gland Pharma (Buy)

| Updated on March 04, 2021

Motilal Oswal

Gland Pharma (Buy)

Target: ₹2,700

CMP: ₹2671.10

Gland Pharma is a comprehensively injectable-focused company, with a wide generics portfolio comprising of: a) own/contract development, b) technology transfer, c) an established manufacturing value chain across the range of delivery systems, and d) extensive regulatory capabilities.

The company is progressing well on building a complex product pipeline, backward integration, and gaining market share in commercialised limited-competition products.

Accordingly, we expect a 25 per cent earnings CAGR over FY20–23. The potential upside in earnings owing to inorganic opportunities funded through cash available on balance sheet is not captured in our estimate.

Gland Pharma stands out in the pharma universe with solid track record of developing and commercializing complex products in the injectables space. Given that injectables have stringent regulatory guidelines compared with other dosages, it is clearly at an advantage on account of its successful compliance.

Moreover, it has delivered superior profitability / return ratios with minimal financial leverage. Accordingly, we value the stock at 29x 12M forward earnings to arrive at Target Price of ₹2,700.

Published on March 05, 2021

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