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Glenmark Pharma hits 8-yr low after global brokerages cut price target on weak Q1 results

While maintaining neutral rating, Credit Suisse also slashed its price target to Rs 415 from Rs 600 after cutting FY20/21 EPS estimates by 24/16 percent to factor in weak Q1.

August 16, 2019 / 11:32 AM IST
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Shares of Glenmark Pharma fell as much as 6 percent intraday to hit more than eight-year low on August 16 as global brokerages cut price target citing weak June quarter earnings.

The stock lost 45 percent in the last nine months and fell up to Rs 360.35 intraday, the lowest level since June 2012. It was quoting at Rs 362.35, down Rs 21.55, or 5.61 percent on the BSE at 1053 hours.

CLSA has maintained a sell call on the stock but slashed price target sharply to Rs 350 from Rs 500 as they expect earnings growth to remain under pressure.

The brokerage cut its FY20-21 EPS estimates by 15-18 percent.

"Debt reduction will depend upon divestment of API business and non-core assets. Weak revenue growth & high R&D spend phase should keep margin subdued," said CLSA.


Glenmark's consolidated profit in Q1FY19 fell 53 percent year-on-year (YoY) to Rs 109.28 crore, but figures are not comparable as the last financial year included one-time forex gain of Rs 138.21 crore.

Consolidated revenue grew 7.3 percent YoY to Rs 2,322.87 crore in Q1.

"Our first quarter performance in key markets like India and Europe was impressive on account of new product launch and partnership deals. However, the overall performance was impacted due to moderate performance in the US and subdued performance in LATAM (Latin America)," Glenmark Chairman and MD Glenn Saldanha said.

Maintaining a neutral rating, Credit Suisse too slashed its price target to Rs 415 from Rs 600 after cutting FY20/21 EPS estimates by 24/16 percent to factor in weak Q1.

The brokerage shifted its valuation to EV/EBITDA as net debt is now 25 percent of enterprise value (EV). The US recovery will be driven by two new launches in Q2 and Novartis deal will help recovery in Brazil, it said.

Disclaimer: The above report is compiled from information available on public platforms. advises users to check with certified experts before taking any investment decisions.

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Moneycontrol News
first published: Aug 16, 2019 11:29 am
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