Reviews

In this edition, we have reviewed Exide Industries Ltd. and Gland Pharma Ltd.. We suggest our reader-investors to HOLD Exide Industries Ltd. and Gland Pharma Ltd. 

We had recommended Exide Industries Ltd. in Volume 38, Issue No. 20 dated Aug 28, 2023— Sept 10, 2023, under the ‘Choice Scrip’ segment. The recommended price for the stock was ₹268.10. We had recommended the stock based on its innovation, strong fundamentals, and ambitious future targets. Exide Industries, a leading Indian public company, manufactures and sells storage batteries and related products across the country. Listed on three Indian stock exchanges, Exide Industries is a frontrunner in energy storage solutions. It holds unique global distinction in manufacturing the widest range of lead-acid batteries and services. 
 

The company’s product portfolio caters to diverse applications, from powering vehicles such as automotive and e-rickshaws to providing backup solutions for homes and industries through inverters, gensets and solar and even critical applications like submarine batteries. In Q3FY24, on a consolidated basis, the company reported growth in net sales of 12.47 per cent to ₹3,979.83 crore as compared to ₹3,538.50 crore in the same quarter the previous year. On a QoQ basis, its net sales decreased by 8.96 per cent. The net profit increased by 2.28 per cent to ₹202.78 crore as compared to ₹198.25 crore in the same quarter the previous year and on a QoQ basis it decreased by 24.93 per cent. At TTM, the shares of Exide Industries are trading at a PE of 29.7 times, which is higher than its three-year median PE of 20.5 times, whereas the industry PE stands at 30.9 times. If we look at its PBV, it is currently at 2.07 times, which is lower than the industry PBV of 3.63 times. The company has a three-year average return on equity (ROE) of 22.2 per cent and a return on capital employed (ROCE) of 11.7 per cent. 
 

Exide Industries is pushing ahead with its well-planned strategy for innovation. This has helped the company add to its portfolio of existing products and technologies. Building on the success of punched plate technology in fourwheeler batteries, it is expanding it to two-wheelers. Exide Industries is also setting up production for high-efficiency absorbent glass mat (AGM) batteries and developing custom-made automotive batteries for export markets. Additionally, its focus extends to compact, powerful batteries for the 5G telecom network and research on advanced battery energy storage systems (BESS) for the future. Also, given the emerging trends in the battery storage sector, we recommend HOLD. 

We had recommended Gland Pharma Ltd. in Volume 38, Issue No. 20 dated Aug 28, 2023— Sept 10, 2023, under the ‘Analysis’ segment. The recommended price for the stock was ₹1,581.35. We had recommended the stock based on its new product launch, strong fundamentals, and solid order book for new programmes. Gland Pharma Limited, established in 1978, is a rapidly growing generic injectables-focused company with a strong track record in compliance with regulatory regimes and complex injectables development, manufacturing and marketing. 
 

Established in Hyderabad, it has expanded its value chain to include contract development, own development, dossier preparation, filing, technology transfer, and manufacturing across various delivery systems. The company is present in sterile injectables, oncology and ophthalmics, and is expanding its development and manufacturing capabilities in complex injectables, peptides, long-acting injectables, suspensions, hormonal products and new delivery systems. In Q3FY24, on a consolidated basis, the company reported growth in net sales of 64.68 per cent to ₹1,545.16 crore as compared to ₹938.29 crore in the same quarter the previous year. 
 

On a QoQ basis, its net sales increased by 12.50 per cent. The net profit decreased by 17.29 per cent to ₹191.86 crore as compared to ₹231.95 crore in the same quarter the previous year and on a QoQ basis it decreased by 1.15 per cent. At TTM, the shares of Gland Pharma are trading at a PE of 43.8 times, which is higher than its three-year median PE of 38.1 times, whereas the industry PE stands at 28.2 times. If we look at its PBV, it is currently at 3.66 times, which is the same as the industry PBV of 3.63 times. 
 

The company has a three-year average return on equity (ROE) of 16 per cent and a return on capital employed (ROCE) of 22.5 per cent. Gland Pharma’s future is promising, with consistent performance and new product launches driving growth in a stable pricing environment. Despite a temporary supply disruption, research and development expenditure remains robust, fuelling the ANDA pipeline for generic drugs in the US. The recently acquired Cenexi presents both challenges and opportunities, with negative EBITDA indicating operational inefficiencies. Gland Pharma sees long-term potential in Cenexi’s existing customer base and a solid order book for new programmes, making it well-positioned for future success. Hence, we recommend HOLD. 

(Closing price as of April 02, 2024)