Gland Pharma Q4 Results Significantly Beat Expectations; Target Price Raised to INR 2,390

Overview

Nomura released a research report maintaining its 'Buy' rating on Indian injectables manufacturer Gland Pharma and raising its May 2027 target price from INR 2,000 to INR 2,390. This adjustment is primarily based on the company’s significantly better-than-expected Q4 FY26 results and management’s optimistic guidance for accelerated revenue growth over the coming years. The report notes that valuation multiples could be supported by complex product launches, increasing contributions from CDMO contracts, and improved utilization of new capacities.

Core views

Significant earnings beat: In Q4 FY26, Gland Pharma’s sales, EBITDA, and net profit beat Nomura’s estimates by 6%, 30%, and 55%, and consensus estimates by 5%, 22%, and 44%, respectively. EBITDA margin expanded by 505 basis points year-over-year to 29.4%, primarily due to operating leverage. CDMO emerges as core growth engine: Excluding Cenexi, CDMO contract revenue in the core business grew 33% YoY in FY26 and surged 65% YoY in Q4 alone. This segment contributed 46% of total revenue in Q4 and delivered 36% YoY growth. Management expects CDMO to generate €400–500 million in incremental revenue in FY27. Strong U.S. market recovery: U.S. sales (excluding Cenexi) increased by $15 million quarter-over-quarter, driven by the launch of five new molecules including Dalbavancin and Brimonidine, along with new GPO contracts. The company filed 8 ANDAs and received 11 new approvals in Q4. Additionally, its first partnered GLP-1 product, liraglutide, has been launched in the U.S., and the company has signed eight GLP-1-related contracts. Cenexi business stabilizes and improves: Cenexi revenue grew 4% YoY on a constant-currency basis, achieving positive EBITDA of €1 million (1% margin), a significant improvement from -12% last year. Management expects Cenexi’s EBITDA margin to reach high single digits in FY27 and mid-teens in the medium term. Future growth guidance and capex: Management forecasts constant-currency revenue growth of 12–13% in FY27, accelerating to ~15% in FY28 and further to 19–20% in FY29. Growth will be driven by complex product launches, new CDMO contracts, and higher utilization of pen/syringe filling capacity (which has expanded from 40 million to 140 million units). The company plans to invest INR 20 billion in capex over the next three years.

Analysis framework

Nomura employed a bottom-up fundamental analysis approach. First, it decomposed quarterly financials to compare actual results against internal models and consensus, identifying key sources of outperformance (e.g., U.S. sales, CDMO growth, and operating leverage). Next, the report analyzed drivers across business segments (U.S., Europe, Other Regions, Cenexi), particularly focusing on contributions from new product pipelines (e.g., GLP-1, complex injectables) and CDMO orders. Finally, incorporating management’s long-term growth guidance and capex plans, Nomura updated its earnings forecast model and reassessed the target price using forward EPS and P/E multiples.

Methodology notes

• Valuation MethodPE/PEG valuation

  Valuation based on forward EPS and P/E multiples

  The report calculates the target price by multiplying FY28E EPS by a specific P/E multiple (22.5x). This method is suitable for growth companies, reflecting their potential by applying a reasonable valuation multiple to projected future earnings.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposing revenue growth into volume growth and price/mix changes

  When analyzing the U.S. market and CDMO business, the report distinguishes between volume-driven growth from new product launches (e.g., Dalbavancin) and revenue contributions from new contracts or pricing strategies, enabling clearer identification of growth drivers.

• Company Fundamentals & Financial FrameworkOperating/Financial Leverage Analysis

  Impact of operating leverage on margins

  The report attributes the significant EBITDA margin expansion primarily to 'operating leverage'—as revenue scales, fixed costs are spread over a larger base, causing margins to expand faster than revenue.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Gland Pharma (GLAD.NS)

  Direct beneficiary with results beating expectations and clear growth outlook

  Strengths

  High-growth CDMO business, successful U.S. new product launches, early-mover advantage in GLP-1 capacity, improving Cenexi operations

  Weaknesses

  Delayed launches of some complex products (post-FY28), geopolitical risks in the Middle East potentially increasing packaging costs

  Comparison

  More forward-looking positioning in complex injectables and CDMO compared to peers

  Risks

  Regulatory risks, FX volatility, earnings growth falling short of expectations

Key data

• Q4 FY26 Sales Beat vs Estimates6% (vs Nomura), 5% (vs Consensus)Indicates strong top-line performance
• Q4 FY26 EBITDA Beat vs Estimates30% (vs Nomura), 22% (vs Consensus)Even stronger bottom-line performance
• Q4 FY26 EBITDA Margin29.4%Expanded by 505 bps YoY
• CDMO Contract Revenue Growth (Q4 FY26)65% YoYKey growth driver within core business
• U.S. Market Sales QoQ Increase (Q4 FY26)$15 millionDriven by new drug launches
• New Target PriceINR 2,390Based on 22.5x FY28F EPS
• FY27E Revenue Growth Guidance12–13% (constant currency)Per management guidance

Impact & implications

The report believes Gland Pharma’s business expansion efforts and capacity investments will accelerate revenue growth, creating upside risk to current valuations. As medium-term revenue growth potentially accelerates, the company could command higher valuation multiples. The current share price trades below its 5-year average one-year forward P/E, making it attractive. Cenexi’s return to profitability will also improve the overall effective tax rate and profit structure.

Risks

• Failure to deliver expected earnings and EBITDA margin improvements over the next two years
• Adverse regulatory developments
• Unfavorable foreign exchange movements
• Packaging material cost increases due to Middle East crisis (estimated to impact revenue by 1–2%)

What to watch

• Timeline and approval status of new complex product launches
• Signing of new CDMO contracts and their revenue contribution
• Cenexi’s EBITDA margin recovery trajectory toward mid-teens levels
• Utilization ramp-up of pen/syringe filling capacity
• Progress on GLP-1 and related biologics contracts