Hold Glenmark Pharmaceuticals; target of Rs 565: ICICI Direct

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ICICI Direct’s research report on Glenmark Pharmaceuticals

Revenues grew 12.4% YoY to Rs 2563.5 crore (I-direct estimate: Rs 2732.7 crore) mainly due 29.1 YoY growth in RoW markets to Rs 385.3 crore (I-direct estimate: Rs 343 crore) and 21.4% growth in the API segment to Rs 248.8 crore (I-direct estimate: Rs 215.1 crore). US revenues grew 10% YoY to Rs 769.6 crore (I-direct estimate: Rs 853.1 crore). India business grew 9.7% YoY to Rs 667.8 crore (I-direct estimate: Rs 700 crore). EBITDA margins stayed flat YoY to ~14% (I-direct estimate: 17.5%). EBITDA grew 11.4% YoY to Rs 364.1 crore (I-direct estimate: Rs 478.2 crore). Net profit grew 6.6% YoY to Rs 161.7 crore (I-direct estimate: Rs 257.5 crore) mainly in line with operational performance.

Outlook

We expect possible monetisation of APIs and proposed unlocking of innovation business to reduce debt as key catalyst for future re-rating of the stock. Our new target price is Rs 565 based on 14x FY21E EPS of Rs 40.3.

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