Reduce Glenmark Pharmaceuticals: target of Rs 1345: ICICI Securities

ICICI Securities recommended reduce rating on Glenmark Pharmaceuticals with a target price of Rs 1345 in its research report dated August 16, 2024.

Broker Research

August 22, 2024 / 16:48 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

ICICI Securities's research report on Glenmark Pharmaceuticals

Glenmark Pharmaceuticals’ (Glenmark) Q1FY25 result was driven by better traction in India (+12% YoY) and EU (+21%) and lower R&D (-190bps). Profitable India business accounted for ~37% of sales vs 35% QoQ though its gross margin dived 172bps QoQ. US revenue rose 3% QoQ (-4.9% YoY) supported by new launches. Key respiratory products may accelerate US growth in H2FY25. India growth of ~12% YoY was a surprise and management target’s 10-15% India growth in FY25. At FY24 end, it had net cash balance of INR 6.7bn; in Jul’24, it divested balance 7.85% stake in Glenmark Lifesciences (GLS) for INR ~7.8bn which will further boost cash balance in near term. Management expects increase in working capital to 72–75 days, R&D between 7–7.5% of sales and capex of INR 7bn in FY25. Maintain REDUCE; TP revised to INR 1,345, based on 20x (18x earlier) FY26E EPS.

Outlook

we expect 13.3%/56.7%/75.6% revenue/EBITDA/PAT CAGR over FY24–26E, with EBITDA margin at ~19% in FY26E. We maintain REDUCE with a revised TP of INR 1,345, based on 20x FY26E EPS (earlier INR 1,000 on 18x FY26E earnings). Key upside risks: Healthy launches, faster recovery in US.

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