Glenmark Pharma may rally upto Rs 400, says PN Vijay

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Glenmark Pharma may rally upto Rs 400, says PN Vijay

Glenmark Pharma may rally upto Rs 400, says PN Vijay, Portfolio Manager, www.askpnvijay.com.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by PN Vijay See what other Experts & Brokerages are saying about Glenmark See messages about Glenmark

Glenmark Pharma may rally upto Rs 400, says PN Vijay, Portfolio Manager, www.askpnvijay.com .

Vijay told CNBC-TV18, "Glenmark Pharma is a midcap pharma stock, arguably India's most innovative pharma company. They are up to something new all the time, so investors are a little bit venture capitalists when they invest into Glenmark."

He further added, "They are strongly into generics in the US market. They have got an impressive array of filings and ANDA pipeline. They are also into cutting edge formulations like hormones and contraceptives and so on there, they have a high margin. Last quarter was a mixed quarter for Glenmark in the sense that the operating business was quite strong, the top line and the bottom-line was strong but they took a big hit on the forex notional losses like many other Indian companies. Also they had two capital flows. One was they get their huge milestone payments every now and then for the discoveries they do and then patent out. They got a good milestone of Rs 120 crore but on the other hand they exercise the put option with Paul Capital and paid them Rs 132 crore. Paul Capital was giving large royalties in connection with some of their generic sales in the US and they decided that that was eating away into the margins so they took a one time hit and coincided that with the milestone. Going forward the EBITDA margins in the US business should go up above 200 basis points because of this. So accurate said that Q2 was good in parts, the operating contours were good but all these things came in."

"I am quite positive about Glenmark because of the strong pipeline of ANDA filings and high margin of the company as such. It's trading around 14 times 2012 PE which is sort of middle of the range for midcap pharma. I expect this stock to do pretty well and have a target of about Rs 400 in the next 12 months which is to my view one of the most interesting stocks in the Indian stock market."