Gland Pharma shares slipped almost 15 percent on Thursday, a day after the company posted a more than 20 percent drop in its profit for the July to September quarter compared to the year-ago period following lower sales and higher expenses.

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During the day, the pharma company’s shares slipped to Rs 1,891 on BSE, just 4 percent away from the all-time low of Rs 1,820.45 touched in November 2020. At 1:15 pm, the stock was trading 14.5 percent lower from the previous close at Rs 1,902.05.

As Gland Pharma missed earnings estimates for the second quarter of the fiscal, several brokerages have downgraded it and/or reduced their target price on the company’s shares. However, some brokerages still expect to see an upside in the share price.

This follows the pharma company’s financial results on Wednesday for the September ended quarter, in which its margin shrank 650 basis points to 28.4 percent, missing the CNBC-TV18 poll projection. The firm also missed estimates on the profit, revenue, and EBITDA fronts. The earnings were lower than in the corresponding quarter last fiscal.

Gland Pharma said revenue from its core markets of the US, Europe, Canada and Australia grew by 3 percent to Rs 747.5 crore in the second quarter, as against Rs 722.5 crore in the corresponding period last fiscal.

However, India's revenue was down 42 percent at Rs 72.6 crore, as compared to Rs 125.8 crore in the year-ago quarter, while the same for the 'rest of the world' market was also down 3 percent at Rs 224.3 crore, as against Rs 232.2 crore in the year-ago period, it added.

Here’s what brokerages said about the results

Citi: Brokerage firm Citi has given the company’s stock a sell rating saying the margin has declined, largely led by a change in mix and increased competition.

Goldman Sachs: The brokerage has given the pharma stock a 'buy' rating and cut the target price to Rs 2,530, meaning it still sees a 13 percent upside in the stock. According to GS, the second quarter was broadly in line with sales/EBITDA declining 3 percent/19 percent year-on-year, as growth in the US was offset by a decline in India (competition) and RoW (recovering sequentially after a washout 1Q region). It has cut FY23-FY25 EPS estimates by 5-9 percent.

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Bernstein: Though it has given an outperform rating, the brokerage has reduced the target to Rs 2,781 from Rs 3,030 earlier. It expects supply resolution and new capacity to support recovery in subsequent quarters after a subdued second quarter.

Morgan Stanley: The brokerage has an overweight stance on Gland Pharma and expects the resumption of growth and strong IP visibility from 2023-2024 onwards.

Jefferies: The global brokerage has downgraded the stock to hold and cut the target price to Rs 2241 from Rs 2843. It has also reduced FY23 and FY24 EPS estimates by 11 and 15 percent each.

It noted that EBITDA margins were depressed on lower gross margins in the RoW market, continued high freight costs, increased employee expenses, and one-offs. However, it said that supply chain challenges would continue to pose growth and margin headwinds in the near term.

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Incred: The brokerage advises the company to hold Gland Pharma shares with a target price of Rs 2,157. It said that some improvement is visible over 1QFY23, but it’s still a far cry from the growth recovery that is currently built into the stock price. It expects more correction to valuation as a lower sustainable medium-term growth rate gets priced in.

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