Nuvama and Motilal Oswal Financial Services raised the target price for Glenmark Pharmaceuticals' shares, citing the company's business turnaround as the primary driver for the upgrade. Glenmark's net profit surged over two-fold to Rs 340.27 crore in Q1 FY25, compared to Rs 149.9 crore in the same period last year, following a net loss of Rs 1,218.28 crore in the previous quarter.
Given Glenmark's mixed June quarter results released on August 14, Nuvama maintained a cautious 'Hold' stance while raising the target price to Rs 1,555 from Rs 1,200. Motilal Oswal upgraded its rating to 'Buy' from 'Neutral' and increased the target price to Rs 1,850 from Rs 1,200.
As of 9.17 AM, Glenmark's shares traded 0.6 percent higher at Rs 1,575. The stock has gained 83 percent over the past six months, massively outperforming the Nifty 50, which gained 11 percent during the same period.
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Both Nuvama and Motilal Oswal agreed that Glenmark's performance in Europe and its domestic market were key factors driving the company's outlook, despite challenges in the US market.
Glenmark's Q1 FY25 revenue grew 7 percent year-on-year to Rs 3,244.2 crore, largely driven by Europe, which posted its highest-ever sales, bolstered by the performance of Ryaltris. The respiratory product contributed $20 million during the quarter and is expected to generate $80 million in FY25, Nuvama said.
However, the US market was a point of concern, with a 5 percent year-over-year decline. The anticipation of a USFDA inspection at two sites is seen as a key factor in overcoming challenges in the US market, pointed out Nuvama. Growth in Asia remained muted.
Also Read | Glenmark Pharma shares jump nearly 6% to hit fresh 52-week high after Q1 net profit surges 96%
Despite these setbacks, Nuvama said that the second half of FY25 might see a recovery as respiratory products gain approvals and the Goa plant, currently awaiting inspection, resumes operations.
Motilal Oswal believes that Glenmark is gearing up for a consistent turnaround in its overall performance. The domestic formulation business is expected to benefit from remodeled distribution, in-licensing, and new launches. Addressing regulatory issues and focusing on a niche pipeline will be vital for future growth in the US, the brokerage said.
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