India's Gland Pharma posts surprise fall in Q1 profit on soaring employee costs

Gland Pharma

06/08/2024 13:47

BENGALURU, Aug 6 (Reuters) - India's Gland Pharma  GLAD.NS , an injectables manufacturer, posted a
surprise drop in quarterly profit on Tuesday, hurt by high employee costs and lower prices for its products in
the United States.
    Its consolidated net profit fell almost 26% to 1.44 billion rupees ($17.2 million) for the quarter ended
June 30. Analysts had expected profit to rise to 2.09 billion rupees, as per LSEG data.
    The company's U.S. sales increased 27% to 7.63 billion rupees, its slowest growth in four quarters.
Employee benefit expenses, which account for about 29% of total costs and is the second-largest expense, shot
up 40%.
    
    KEY CONTEXT
    Gland Pharma acquired French pharmaceutical group Cenexi, a sterile and injectable pharmaceutical products
maker, in January 2023. This helped boost its sales in Europe, which contributes 18% to overall sales.
    Still, the U.S. is its largest source of revenue, accounting for 54% of overall sales.
    Most of India's generic drugmakers derive a significant chunk of revenue from the United States, where
lower drug prices amid stiff competition have been weighing on companies' margins.
    Gland Pharma's rival Dr Reddy's  REDY.NS  posted a quarterly profit drop, while Sun Pharma  SUN.NS  and
Cipla  CIPL.NS  beat estimates.
    
    PEER COMPARISON
    
                                   Valuation    Estimates   Analysts                                   
                                   (next 12      (next 12      '                                       
                                    months)      months)    sentimen                                   
                                                               t                                       
                      RIC        PE     EV/EBI  Revenue     Profit    Mean     # of     Stock to       Div
                                        TDA     growth      growth    rating*  analyst  price          yield
                                                                               s        target**       (%)
 Gland Pharma          GLAD.NS   32.69   19.10    12.66      24.92    Hold          12      1.14           0.95
 Dr Reddy's            REDY.NS   19.61   12.33    10.36       3.34    Hold          33      1.04           0.59
 Laboratories                                                                                          
 Cipla                 CIPL.NS   25.25   15.73     8.88       9.88    Hold          31      0.95           0.86
 Sun Pharmaceutical    SUN.NS    35.23   26.02    10.26      13.39    Buy           31      1.00           0.78
 Industries                                                                                            
    * The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
    ** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is
trading above the PT
    
    APRIL-JUNE STOCK PERFORMANCE

    
    -- All data from LSEG IBES
    -- $1 = 83.8780 Indian rupees

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 (Reporting by Varun Hebbalalu in Bengaluru; Editing by Sonia Cheema)
 ((varunvyas.hebbalalu@thomsonreuters.com;))