Buy Gland Pharma; target of Rs 2260: Sharekhan

Sharekhan's research report on Gland Pharma

Gland Pharma (Gland) is wholly acquiring French based Cenexi group for an enterprise value (EV) of Euro 230mn (valued at EV/Sales of 1.2x its CY22E expected sales); Cenexi operates in CDMO space with expertise in sterile business. The acquisition is in line with Gland’s strategy of building a European manufacturing presence in sterile injectables. ~70% Cenexi’s revenues come from sterile and injectable products. Though EBITDA margins of the acquired company is lower than Gland’s, the operating efficiencies, focus on specialty projects and scale-up in the business will help Gland’s EBIDTA margins to improve in long run.

Outlook

Acquisition will add value to Gland’s business in the long run. Recent news regards to its parent Fosun Pharma Ltd.’s potential stake sale is a key monitorable. We have Buy rating on the stock with an unchanged PT of Rs. 2260.

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Gland Pharma - 01 -12-2022 - khan