Cenexi recovery, new product launches and capacity additions power Gland Pharma outlook

Gland Pharma has gained 19% on the bourses in the past three trading sessions to hit a 52-week high after the company reported a strong March quarter and full-year performance. Cenexi, its European subsidiary, has started to show a gradual improvement in profitability after breaking even two quarters ago. While it is expected to report a low double-digit revenue growth for FY27 amid geopolitical uncertainties, Gland management expects a stronger momentum in FY28 given the capacity additions and new product lines.

The stock’s price-to-earnings (P/E) multiple at 35.6 remains below the three and five-year average of 37-38 despite the current rally, suggesting that valuations remain reasonable. Given the growth visibility, the stock is likely to stay on investors’ radar.

Gland Pharma’s acquisition of Cenexi in April 2023 has strengthened its European presence, with the region’s revenue share rising to 22% in FY26 from 5% in FY23. The company is targeting around 10% revenue growth to 200 million in FY27 from 182 million in FY26, indicating a moderation when compared with the 25% growth in FY26. However, a larger part of the expansion is expected to play out from FY28, which is likely to improve growth prospects.

After reporting loss at the operating level in FY26, Cenexi is expected to deliver mid-to-high single-digit operating margin before depreciation and amortisation (EBITDA margin) in FY27. It is likely to expand further to mid-teen levels over the medium term.

The contract development and manufacturing (CDMO) business, which accounts for nearly half of overall revenue at the consolidated level, grew by 28% in FY26. The company is focusing more on complex and high-margin CDMO opportunities, including oncology, complex injectables, peptides and drug delivery systems. A key CDMO project is expected to be commercialised in the second half of FY28, with an annual revenue potential of $25-30 million. To cater to the rising demand, the company has outlined a capital expenditure of ₹2,000 crore over the next five years aimed at expanding the CDMO capacity. The drug maker’s revenue rose 14.5% year-on-year in FY26 to ₹6,430.7 crore. It has guided for a 15% growth in the medium term, led by new launches, ramp-up in key products, better utilisation, and Cenexi’s turnaround.