Pharmaceutical company Gland Pharma Ltd also underperformed this week on concerns over parent company Fosun Pharma.
The Hyderabad-based company corrected its market capitalization by more than 40% from its 52-week high after reports emerged that Chinese regulators asked banks to check financial exposure to Fosun Pharma.
Speculation about Fosun Pharma began after the company was downgraded one notch to B1 by ratings firm Moody’s in August, due to concerns over liquidity, refinancing pressure and exposure to the real estate market. Chinese.
Fosun International is a diversified conglomerate with stakes in various businesses including insurance, hospitals, diagnostics and fashion entertainment, and it owns approximately 57.87% of Gland’s equity.
Recently, Fosun Pharma had contributed a majority stake in Gland – 74% in a deal valued at over Rs 6,000 crore odd, nearly Rs 7,000 crore in 2017. It was finally listed in 2020.
However, Gland has his own concerns, including low numbers. In the first quarter, revenues were down 26%, margins were around 31% and profits were down 25%. There are supply issues that the street fears will continue for the business.
The company, however, is confident in terms of improving growth. There were issues such as syringe supplies, which now seem to have eased and we’ve probably seen the worst.
In terms of valuations for Gland in FY23, the PE is 22x vs a 1 year high of 60x and FY24 is 27x vs a 1 year high of nearly 50x.
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First post: STI