Buy Glenmark Pharma; target of Rs 565: Firstcall Research

Firstcall Research is bullish on Glenmark Pharma and has recommended buy rating on the stock with a target of Rs 565 in its March 18, 2013 research report.
 
“Glenmark Pharmaceuticals Limited, together with its subsidiaries, engages in the manufacture and marketing of pharmaceutical formulations and active pharmaceutical ingredients in India and internationally. Its formulations include solid, semi-solid, and liquid orals, as well as external preparations, including powders, lotions, creams, and capsules. The company has a collaborations or partnerships with Forest Laboratories, Inc.; Teijin Pharma Limited; Dyax Corp; and Eli Lilly and Company. The company was founded in 1977 and is headquartered in Mumbai, India Glenmark is a leading player in the discovery of new molecules both NCEs (new chemical entity) and NBEs (new biological entity) with five molecules in various stages of clinical development.”
 
“The company has a significant presence in branded generics markets across emerging economies including India. Its subsidiary, Glenmark Generics Limited has a fast growing and robust US generics business. The subsidiary also markets APIs to regulated and semi-regulated countries. Glenmark employs nearly 9500 people in over 80 countries. It has thirteen manufacturing facilities in four countries and has five R&D centres.” Recently, Glenmark has been chosen as the 'Best Company across Emerging Markets' 2011, and recognized for the 'Best Overall Pipeline' 2011 by SCRIP, the largest selling and most respected pharmaceutical magazine in the world. SCRIP had also recognized Glenmark as 'Best Pharma Company in the World – SME' and 'Best Company in an Emerging Market' in 2008.”
 
“The company’s net profit jumps to Rs.2129.17 million against Rs.461.18 million in the corresponding quarter ending of previous year, an increase of 361.68 percent. Revenue for the quarter rose 33.97 percent to Rs.13816.13 million from Rs.10313.12 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.7.86 a share during the quarter, registering 361.13 percent increase over previous year period. Profit before interest, depreciation and tax is Rs.3253.13 millions as against Rs.1133.98 millions in the corresponding period of the previous year.”
 
“India's pharmaceutical sector is expected to touch US USD 74 billion in sales by 2020 from the current US USD 11 billion, according to a PricewaterhouseCoopers (PwC) report. At the current market price of Rs.500.00, the stock P/E ratio is at 19.29 x FY13E and 15.79 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs 25.92 and Rs.31.66 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 27 percent and 24 percent over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 13.51 x for FY13E and 11.14 x for FY14E. Price to Book Value of the stock is expected to be at 4.36 x and 3.42 x respectively for FY13E and FY14E. We recommend ‘BUY’ in this particular scrip with a target price of Rs 565 for medium to long term Investment,” says Firstcall Research report.

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