Gland Pharma, an Indian generic injectables maker, reported a lower-than-expected profit in the fourth quarter (Q4) of fiscal year 2024 (FY24). The company’s net profit stood at Rs 192.4 crore, falling short of analysts’ estimates of Rs 2.41 billion. Despite a strong demand in its core markets, the company’s higher employee expenses overshadowed its revenue growth.
Revenue Growth
Gland Pharma’s revenue jumped nearly 96% to Rs 15.37 billion in Q4 FY24, exceeding analysts’ estimates of Rs 15.23 billion. This significant revenue growth was driven by an eight-fold increase in sales in Europe and an 83% growth in sales in the United States. These regions account for approximately 75% of the company’s overall revenue.
Soaring Employee Costs
The company’s expenses surged by 95% to Rs 12.81 billion in Q4 FY24, primarily due to a more than three-fold increase in employee-related costs. Gland Pharma also experienced higher raw material prices, contributing to its increased operating expenses.
Tax Expenses
Gland Pharma’s tax expenses also witnessed a sharp increase, rising by more than three-fold to Rs 1.06 billion in Q4 FY24. This contributed to the company’s lower profit margin.
Analyst Commentary
Analysts attributed Gland Pharma’s lower-than-expected profit to the company’s soaring employee costs, which offset its revenue growth. They highlighted that the company’s expenses have been rising rapidly, outpacing the growth in its top line. This sentiment has been echoed by brokerage firm Motilal Oswal, which has revised its earnings estimates for Gland Pharma’s upcoming fiscal year.
Market Reaction
The market reacted positively to Gland Pharma’s Q4 FY24 results, with the company’s shares rising by over 2% following the announcement. Investors seemed to focus more on the company’s strong revenue growth, despite the lower profit. However, it remains to be seen if the market sentiment will sustain in the long run, given the company’s rising expenses.
Dividend Announcement
Separately, Gland Pharma has declared a dividend of Rs 20 per share for the fiscal year 2024. This dividend announcement was well-received by investors, contributing to the company’s positive share price movement.
Conclusion
Gland Pharma’s lower profit in Q4 FY24 was primarily due to its soaring employee costs, which outweighed its strong revenue growth. While the company’s revenue exceeded analysts’ estimates, the increase in expenses overshadowed its performance. Investors will be closely monitoring Gland Pharma’s cost management strategies and future profitability in the upcoming quarters.
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