🧠 At a Glance
Once India’s injectable poster boy with sky-high margins, Gland Pharma now looks like a pharma unicorn that overdosed on capex and caught a profit cold. From growing like a biotech rocket to dealing with inventory pileups and promoter exit fears, this ₹28,000 Cr company has seen it all in five years — including a Chinese takeover, FDA drama, and cash flow resuscitation. But can it bounce back?
🧪 Part 1: What They Do (and How They Made Billions Doing It)
- Founded in 1978, based in Hyderabad, but now 51.8% owned by Shanghai Fosun Pharma 🐉 — yes, a Chinese pharma major.
- Makes injectables — sterile products like vials, pre-filled syringes, and oncology drugs. These are complex to manufacture, regulated tightly, and highly profitable… when it works.
- Operates on a B2B export model, primarily to the US and EU. So they’re like a pharma OEM — think Bharat Forge but for drugs.
📊 Part 2: The 5-Year Financial Booster (or Burn?)
Revenue & Profit (₹ in Cr)
| Year | Revenue | Net Profit | OPM | ROCE |
|---|---|---|---|---|
| FY21 | ₹3,463 | ₹997 | 38% | 28% |
| FY22 | ₹4,401 | ₹1,212 | 34% | 25% |
| FY23 | ₹3,625 | ₹781 | 28% | 15% |
| FY24 | ₹5,665 | ₹772 | 24% | 14% |
| FY25 | ₹5,616 | ₹699 | 23% | 12% |
🎯 From FY21–FY25:
- Revenue CAGR: ~13%
- Profit CAGR: -8% (That’s not a typo, that’s a profit decay)
- Margins eroded from 38% to 23%
- ROCE fell like your immunity in Delhi winter: 28% ➝ 12%
📉 Stock price in the same period:
From ₹3,000+ in 2021 to ₹1,707 today — a 43% drawdown despite strong FDA compliance. Pharma winter, anyone?
🧴 Part 3: What Went Wrong with the Wonder Drug?
- Gland got high on CAPEX steroids — acquired France’s Cenexi in 2023 for ~₹1,800 Cr. Integration is still ongoing.
- Inventory days shot up to 294 — maybe they injected too many units into warehouses instead of veins.
- Cash Conversion Cycle expanded to 250 days — feels more like a constipation cycle.
- Decline in US generic pricing + API cost volatility = 💉 margin pressure.
- Promoter holding dropped by 6% in 3 years — not a great sign when your own chemists leave the lab.
💰 Part 4: Balance Sheet — At Least the Patient Isn’t Dead
| Metric | FY25 |
|---|---|
| Debt | ₹314 Cr (manageable) |
| Net Cash Flow | ₹2,186 Cr (thanks to investing exits) |
| Free Cash Flow | ₹915 Cr (healthy) |
| Dividend Payout | 42% (consistent) |
✅ Positive:
- Net cash–generating business with solid dividend.
- Very low interest cost = minimal debt load.
- Despite falling profits, still operating in black.
🚩 Negative:
- ROCE sub-12% = not pharma-level returns.
- Capex is not yet translating to revenue spikes.
- Global pressure on generic injectables pricing continues.
📈 Part 5: Quarter-on-Quarter Doses
| Quarter | Sales (₹ Cr) | Net Profit (₹ Cr) | OPM |
|---|---|---|---|
| Jun ’24 | 1,402 | 144 | 19% |
| Sep ’24 | 1,406 | 164 | 21% |
| Dec ’24 | 1,384 | 205 | 26% |
| Mar ’25 | 1,425 | 187 | 24% |
So there is some margin revival — but nowhere close to the 2020-22 highs. That 36–38% OPM era might have been a pandemic-induced hallucination.
🔬 Part 6: Valuation Check — Is It Cheap Yet?
- TTM EPS: ₹42.40
- CMP: ₹1,707
- P/E: 40x
- Book Value: ₹555 → P/B: 3.07x
💡 What’s a fair P/E for a low-growth, high-cash, mid-cap injectable company?
Let’s assume a 22x–26x range, considering:
- US + EU exposure ✅
- Weak margin trend ❌
- Healthy cash flows ✅
- Chinese promoter overhang ❌
🧮 Fair Value Range:
| FV Estimate | Calculation |
|---|---|
| ₹933 | ₹42.40 EPS × 22 |
| ₹1,102 | ₹42.40 EPS × 26 |
FV Range: ₹933 – ₹1,102
📉 That’s ~35–45% downside from CMP of ₹1,707
Unless there’s a mega margin revival, this feels like a highly priced IV drip.
🧪 Part 7: Peer Comparison (Is Gland Still Potent?)
| Company | ROCE | P/E | Sales Growth | Margin |
|---|---|---|---|---|
| Sun Pharma | 20% | 34x | 8% | 20% |
| Cipla | 23% | 22x | 9% | 22% |
| Dr Reddy’s | 23% | 19x | 19% | 24% |
| Divi’s Labs | 20% | 78x | 12% | 30% |
| Gland | 12% | 40x | -1% | 23% |
🤕 Verdict: Gland is charging premium valuations with sub-par profitability and flat growth. Not exactly a healthy mix.
🧾 TL;DR – “Gland Pharma: Great Syringes, Lousy Story Arc”
- 🏭 Massive manufacturing + global presence
- 💸 Consistently FCF positive, almost debt-free
- 📉 Margins down, ROCE halved in 5 years
- 🧊 Promoter stake falling = confidence shaky
- 🔬 Valuation still rich — P/E 40x for declining growth? Bruh.
- ⚠️ FV range: ₹933–₹1,102 → Currently overpriced by ~40%
✍️ Written by Prashant | 📅 20 June 2025
Tags: Gland Pharma, Injectables, Fosun Pharma, Pharma Stocks, Export Pharma, Healthcare India, Margin Pressure, EduInvesting
