Gland Pharma shares rebound with 10% rally after 5-day losing streak

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Shares of Gland Pharma rebounded in early trade on May 23 after a sharp plunge in the stock in the last five sessions.

The stock had lost nearly 39 percent in the five sessions, but the past two sessions were worst when it eroded over 36 percent of share value on the back of a dismal set of fourth-quarter earnings. It made a fresh 52-week low of Rs 861 on May 22.

The drugmaker's disappointing quarterly results, reflected in a sharp decline in net profit, revenue, as well as operating margins, on the back of an unfavourable base, production shutdown at one of its facilities and sluggish demand.

The pharma company's quarterly net profit declined 72.5 percent from last year to Rs 78.6 crore. It could be attributed to a nearly 29 percent slump in revenue.

Also Read: Gland Pharma shares tumble 19%, take 2-day fall to 34%. Here's the main reason behind selloff

The decline in the company's Q4 revenue was primarily caused by a high base of Covid-related sales in the previous year, as well as temporary shutdown of its production line at the Pashamylaram Penems facility for line upgrade. A decrease in sales in the Rest of the World (RoW) market due to seasonal tendering and reduced business from the domestic B2C division further contributed to the poor performance.

The company's EBITDA margin contracted sharply to 21.5 percent during the January-March period, compared to 31.6 percent a year back.

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In the aftermath of the weak earnings, down on all fronts, several brokerages cut their estimates for FY24/FY25, with some, including Morgan Stanley, even downgrading the stock.

Morgan Stanley Investment Funds Emerging Markets Equity Fund also offloaded  Rs 89.4 crore shares in Gland Pharma on May 22.

The steep correction in the stock, however, gave way for bargain buying to seep in, leading to a rebound in Tuesday's session. At 11.02am, shares of Gland Pharma were trading with 6.70 percent gains at Rs 953.45 on the National Stock Exchange.

Volumes were also high as 34 lakh shares of the company changed hands on the bourses, significantly higher than the one-month daily traded average of 11 lakhs.

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