Gland Pharma

Update on Indian equity market:
On Thursday, the Nifty50 touched an all-time high before closing flat at 13,982 on the penultimate trading day of 2020. Surprisingly, the index has given 15% returns in a year where the world was struggling with the pandemic, the best since 2017! Within the index, HDFC (1.3%), SUN PHARMA (1.1%), and DIVISLABS (1.0%) led the gainers while SHREECEM (-2.4%), TCS (-1.5%), and ULTRACEMCO (-1.4%) were the highest losers. Among the sectoral indices, REALTY (1.2%), MEDIA (0.9%), and METAL (0.7%) led the gainers offset by PSU BANK (-0.5%), FMCG (-0.4%), and IT (-0.3%).
Excerpts of an interview with Mr. Srinivas Sadu, Managing Director and CEO, Gland Pharma Ltd (Gland) published on CNBC-TV18 dated 30th December 2020:
The business model of Gland is focused on B2B (Business to Business) in over 60 countries and the company will focus on growing in the same space.
He said that the order book is strong for the next year. The company has also planned several launches to aid in growth. The year 2020 was different as the product mix was different due to the pandemic.
1QFY21 was affected due to the pandemic. The company managed to sell a lot of ICU related products in the US and other markets.
The company has a strong presence in anti-infectives. 30% of the revenues are contributed by this segment. The company also has 20-30% of the APIs (Active Pharmaceutical Ingredient) backward integrated.
As a part of the growth strategy, the company is not shying away from mergers and acquisitions provided that it has to fit in the growth strategy of the company.
Consensus Estimate: (Source: market screener and investing.com website)
The closing price of Gland was ₹ 2,380/- as of 31-Dec-2020. It traded at 39x/ 32x/ 26x the consensus EPS estimate of ₹ 61/ 74/ 93 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 2,330/- implies a P/E multiple of 25x on FY23E EPS of ₹ 93.
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