Nov 23, 2012, 11.05 AM | Source: Moneycontrol.com
ICICIdirect.com is bullish on Glenmark Pharma and has recommended buy rating on the stock with a target price of Rs 520 in its November 22, 2012 research report.
, ICICIdirect.com |
“The share price of Glenmark Pharma remains in a well established medium term uptrend since registering a breakout past the Triangular consolidation pattern in April 2012. The subsequent up move since April 2012 saw the stock steer past its key supply area of Rs 385-390 levels and hit a high of Rs450 levels towards August 2012. After rallying nearly 50% in a span of just five months from a low of Rs 301 in April 2012 to a high of Rs 450 in August 2012 the stock went into a sideways consolidation mode over the next three months. During the consolidation phase, the stock took support precisely at the previous resistance area of Rs 385-390 levels. This highlights the Change of Polarity principle, which states that a significant resistance once taken out reverses its role as a support for future price movement Pictorially, the sideways consolidation since August 2012 till date has taken a form of a Flag pattern. A Flag formation is a bullish continuation pattern, which marks a temporary pause in an uptrend as bulls take a breather before resumption of the preceding up move. The price action in the last few sessions has seen the stock register a breakout from the Flag pattern with strong volumes.”
“Among oscillators, the 14 period RSI on the weekly chart is firmly poised as it has generated a positive crossover above its nine period average after working off the overbought conditions prevailing during the rally from April to August 2012. Following the breakout, we expect the stock to resume its northward journey and head towards 520 plus levels over a medium term horizon. Therefore, we recommend accumulating the stock between 440 and 428 levels with a protective stop loss in place at Rs 389.”
“The company is one of the few generic companies, which enjoys a substantial foothold in therapies like Derma and Oral contraceptives in the US market, which has caused strong CAGR of 21% between FY08 and FY12 in the US. We believe the growth story will only get better on the back of a robust pipeline of 81 ANDAs approved and 43 ANDAs pending for approval with the USFDA. The 43 pending applications include 19 that are Para IV filings. As per latest AIOCD data, Glenmark is the second largest player in the dermatology space after GSK Pharma in the domestic market with a market share of 11%. It also enjoys decent market share in therapies like respiratory and cardiac.”
“The company keeps on introducing at least 20 new products and line extensions in the domestic market to strengthen the market share. Sales in the domestic market grew at a CAGR of 18% between FY08 and FY12.We expect overall revenues, EBITDA and profit to grow at a CAGR of 19%, 18% and 28%, respectively, between FY12 and FY14E. The company is currently trading at ~21x FY13E EPS of Rs 20.7 and ~15x FY14E EPS of Rs 27.9,” says ICICIdirect.com research report.
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