Gland Pharma’s revenue declined 29 per cent year-on-year (YoY) to Rs 785 crore mainly due to lower offtake of the key products in developed as well as domestic markets and also due to production line shut down in Pashamylaram Penems facility due to line upgradation.
On operational front earnings before interest, taxes, depreciation and amortization (EBITDA) de-grew 52 per cent YoY to Rs 169 crore with margins at 21.5 per cent.
One of the customers of Gland has filed for voluntary proceedings under Chapter 11 of the US bankruptcy code. Accordingly, Gland has recorded a provision of Rs 56.5 crore for credit impaired financial asset in Q4FY23.
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In addition to one of the customers filing for bankruptcy, there has been a shift of business by another customer, impacting Gland’s performance adversely for Q4FY23.
Motilal Oswal Financial Services cut its earnings by 36 per cent/22 per cent for FY24E/FY25E factoring in reduction in scope of business from a bankrupt customer, gradual revival in business due to shift of business by another customer to alternate supplier, and reduced share of profit due to higher competition in existing product portfolio.
While the multiple headwinds on revenue and operational cost have hit its FY23 performance, the brokerage firm expects a slow recovery over the next 12-15 month aided by new launches in China/other regulated markets, newer contracts in CDMO segment and inventory rationalization of existing products, it added.