Emkay Global Financial Services is bullish on Glenmark Pharma and has recommended buy rating on the stock with a target of Rs 500 in its October 31, 2012 research report.
“Glenmark Pharma, India revenues (contributed 27%) grew 35% YoY to Rs3.4bn led by market share gains in derma (8.9%), respiratory (3.22%), CVS (3.07%), AI (1.61%) and Pain (1.08%) portfolio. Volume growth was 18%, Price led growth was 6% and the rest was from new introductions. US business (contr. 34%) grew 19% in $ terms to USD78mn and 43% YoY in INR terms due to launch of generic SIngulair this quarter and market share gains for OC products. The company had launched 5 new OCs in Q1FY13. Gross margins were up 35bps YoY to 65% and adjusted EBITDA margins were up 45bps YoY to 20% on account of higher R&D expenses (8.4% of sales vs. 6.5% of sales in Q2FY12). Adjusted for licensing income & forex gain of Rs1500mn this quarter, APAT grew by 16% YoY to Rs1.45bn.”
“Guidance – Top-line is expected to grow by 22-25% with gross margins to remain at 65% clocking an EBITDA of Rs9-9.5bn in FY13. R&D expenses to remain high at 8% for FY13/14. US biz will continue to show strong performance led by launch of Cutivate & 12 products in the OC portfolio. OC sales expected to peak out in next two years. Management has guided for 20% growth in US in FY13. Currently the company has 43 ANDAs pending approval, of which 19 are P-IV’s. India business is expected to grow above industry rates at 18-20% led by market share gains in key therapies of Derma, Respiratory, CVS, Pain and Anti-infective.”
“We expect base business to report 26% revenue growth in FY13E and 16% in FY14E. Base EBIDTA margins are expected to improve from 19.5% in FY12 to 20% in FY14E. Base earnings will grow by 20% CAGR over FY12-14E. Upgrade the stock to buy with a revised target price of Rs500 (18xFY14 EPS of Rs25+ NPV of Rs49). At CMP, the stock is trading at 19x FY13E and 16x FY14E earnings,” says Emkay Global Financial Services research report. Shares held by Financial Institutions/Banks Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment
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