KR Choksey has come out with a report on Glenmark Pharmaceuticals' Q2FY10 earnings. The research firm valued the company at FY11E P/E multiple of 16x, deriving a valuation of Rs 274 per share and recommended buy rating on the stock.

"We expect that the company would come out of the dark clouds and shine. The company’s block buster drug Melogliptin would enter phase III trial this year end and the company is in discussion to out license the same. The rich pipeline of drugs coupled with several ANDA approvals confirms the strong revenue visibility of the company. Going forward we also expect that the company would receive some licensing income provided it gets a partner for Melogliptin and if the result of Olgimilast, the anti asthma drug turns out to be positive. Therefore we maintain our optimistic view on the company supported by the consolidation from the acquisitions (like Actavis), revenue contribution from the new launches and increasing number of approvals from USFDA which would strengthen the earnings visibility of the company", says KR Choksey.

"At the CMP of Rs 224, the stock is trading at 17.5x FY10E EPS of Rs 12.8 and 12.9x FY11E EPS of Rs 17.4. We have valued the company at FY11E P/E multiple of 16x, deriving a valuation of Rs. 274 per share and recommend Buy rating on the stock."

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