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Financial performance has seen an increasing trend in the last three fiscals (FY18-20). Revenue for FY20 has increased by 30% to Rs 2772.41 crore from Rs 2129.77 crore in FY19. This was mainly due to increased revenues from the rise in export sales to the US and Canada. PAT increased by 70% to Rs 767.64 crore in FY20. Operating and the net margins have remained robust for the last three fiscals as can be seen from the table below. RoNW is strong being 21.05% in FY20 and 15.78% in FY19.
The first-quarter result for FY21 has remained strong. The Company has posted PAT of Rs 312.56 crore against revenues of Rs 916.29 crore for Q1FY21.
Title | Q1FY21 | FY2020 | FY2019 | FY2018 |
Total Revenue | 916.29 | 2772.41 | 2129.77 | 1671.68 |
PAT | 312.56 | 767.64 | 451.64 | 320.55 |
EBITDA | 444.73 | 1094.64 | 792.07 | 584.08 |
Total Accets | 4691.27 | 4086.04 | 3523.55 | 2929.47 |
Operation Margin(%) | 48.54% | 39.48% | 37.19% | 34.94% |
Net margin(%) | 34.11% | 27.69% | 21.21% | 19.18% |
The issue is fully priced at P/BV of 5.86 based on its NAV of Rs 255.79 (at upper price band) as on June 30, 2020. At price band of Rs 1500, P/E is 30.07 but has no comparable industry P/E ratio as it has no listed peers according to the RHP.
Valuation Parameters | EPS | P/E | NAV | Industry P/E | Industry P/BV |
Total Revenue | 49.88 | 30.07 | 235.32 | NA | 5.86 |
The pharma sector has remained in focus especially during the pandemic and has performed well with reasonable returns. Indian drugs are exported to more than 200 countries in the world with the USA being the key market. Generic drugs account for 20% of the global export in terms of volume, making India, the largest provider of generic medicines globally. The sector is benefited by the ‘Pharma Vision 2020’ by the Government’s Department of Pharmaceuticals which aims to make India a major hub for end-to-end drug discovery. Though these are the factors favorable for the overall Pharma sector in India but Gland Pharma is backed by a Chinese guardian and the current geopolitical tensions due to military aggression in Eastern Ladakh earlier this year between China and India remains a major concern for the investors. Amidst the nationwide boycotting of the Chinese apps and Chinese goods, it would be interesting to see how the investors react to this IPO!! If the management is to be believed, it was mentioned that Gland Pharma would not be affected by such external risks.
The company has strong financial performance since 2017 when Fosun took over a major stake; post-IPO its stake would come down to 58%. The IPO is worth investing in if the geo-political tension remains subdued. However, investors wary of external risk may consider investing based on their risk appetite.
Review By CA Priyanka Choudhary on 3rd Nov 2020
About CA Priyanka Choudhary
Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.
Email: [email protected]
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