After a strong run in 2023, shares of Gland Pharma have had a slow start to 2024. In the last 30 days, the stock has gone down around 10%. Analysts at Motilal Oswal think that the stock is trading at an attractive valuation.

The Gland Pharma Analyst: Tushar Manudhane-led analyst team at Motilal Oswal maintained the “buy” rating for the stock with a target price of ₹2,240. The target suggests an around 32% upside from the stock’s last closing price of ₹700.75.

The Gland Pharma Thesis: The analysts said that the pharma company has demonstrated a promising resurgence in its business performance during the first nine months of FY24 following a challenging FY23.

Despite the setbacks faced in FY23, Gland Pharma has made significant strides in core markets, registering an 8.5% YoY growth in sales over the past nine months, the analysts added. The uptick in sales within the company’s core markets can be attributed to the introduction of new products and the relaunch of certain existing ones.

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Addressing supply chain issues has further bolstered this revival. The brokerage highlighted that with major hurdles now resolved and a robust product pipeline in place, the company is expected to see an 11% CAGR in sales over FY24-26, reaching ₹4,000 crore billion in core markets.

The analysts also noted that the pharma major is actively expanding its footprint in the Rest of the World (RoW) segment through new registrations and market expansions. In the past, RoW sales experienced an impressive 79% CAGR during FY18-22, primarily driven by robust product demand. However, challenges such as supply chain disruptions, facility shutdowns, and reduced sales of low-margin products led to an 18% and 5% YoY decline in sales during FY23 and 9MFY24, respectively, the brokerage noted.

The company is also pursuing avenues for growth via mergers and acquisitions as well as organic initiatives. The brokerage added that the company’s valuation at 24 times FY26E EPS, is attractive.

Price Action: Gland Pharma’s share price was up 3% to trade at ₹1,751.70 on Thursday afternoon.

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