Shares of Gland Pharma Ltd. were trading 7% higher on Monday, November 9, after the pharmaceutical company reported a strong set of September quarter (Q2FY27) results, supported by robust growth in its US business and improved operating performance.
Brokerages, however, remained divided on the stock’s valuation and growth prospects, with Nomura maintaining a ‘Buy’ rating while Citi retained its ‘Sell’ recommendation.
On a consolidated basis, Gland Pharma reported a 58.2% year-on-year increase in net profit to ₹291 crore in Q2FY27, compared with ₹184 crore in the corresponding quarter of the previous fiscal year.
Revenue from operations rose 23.3% year-on-year to ₹1,834 crore from ₹1,487 crore in Q2FY26. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 54.1% to ₹484 crore from ₹314 crore a year earlier. EBITDA margin expanded to 26.4% from 21.1% in the year-ago quarter.
US biz leads geographical growth
Gland Pharma’s US business remained the key growth driver, with revenue increasing 42% year-on-year to ₹1,179.5 crore from ₹827.9 crore.
Revenue from Europe grew 30% to ₹371 crore from ₹284.7 crore. However, the company’s other core markets, comprising Canada, Australia and New Zealand, reported an 18% decline in revenue to ₹40 crore.
Revenue from India fell 42% year-on-year to ₹38.7 crore, while the rest of the world (RoW) business declined 21% to ₹204.4 crore.
CDMO biz records strong growth
Among business segments, the contract development and manufacturing organisation (CDMO) business reported 31% year-on-year growth in revenue to ₹822.7 crore from ₹628.9 crore. The segment contributed 45% to the company’s total revenue.
The critical injectables business grew 18% to ₹1,010.9 crore from ₹858 crore, accounting for the remaining 55% of revenue.
However, its wholly owned subsidiary, Cenexi, slipped back into an EBITDA loss during the quarter. Management expects the business to return to profitability from Q3FY27 onwards.
Gland Pharma maintained its FY27 revenue growth guidance of 15% in constant currency terms. The company has also outlined a target of achieving a 20% compound annual growth rate (CAGR) over the next four years.
Brokerage firm Nomura has a ‘Buy’ rating on Gland Pharma, with a price target of ₹3,790 per share. The brokerage believes the company’s strong Q2FY27 performance, particularly the continued momentum in the US market, supports its growth outlook.
It also sees scope for an expansion in the stock’s valuation multiple, reflecting a structural shift in Gland Pharma’s business model towards a greater focus on CDMO operations.
Nomura highlighted the company’s increased investment plans, with brownfield capital expenditure raised to ₹3,000 crore and additional greenfield investments planned as it scales up its CDMO ambitions.
The brokerage believes that successfully developing its biologics CDMO capabilities and securing meaningful business from innovator clients could make the company’s growth trajectory more sustainable.
In contrast, Citi has retained its ‘Sell’ rating on Gland Pharma, with a price target of ₹2,360 per share. Citi said that the company delivered another strong quarter, with revenue and EBITDA growing 23% and 54% year-on-year, respectively, supported by continued momentum in the US business, currency benefits and operating leverage.
However, the brokerage pointed out that performance was broadly flat sequentially, with revenue increasing just 2% quarter-on-quarter while EBITDA declined 3%. The planned shutdown at Cenexi partly contributed to the sequential weakness.
Citi said that management has reiterated its FY27 revenue growth guidance of 15% in constant currency terms, compared with growth of 10–12% in the first half. It also expects Cenexi to return to profitability from Q3FY27.
Despite the strong operational performance, Citi believes current valuations already factor in a meaningful acceleration in near-term growth and margins, limiting further upside.
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Gland Pharma shares jump 7% to 52-week high; Nomura sees re-rating but Citi says ‘sell’