Accumulate Glenmark Pharmaceuticals; target of Rs 460: Prabhudas Lilladher

Prabhudas Lilladher's research report on Glenmark Pharmaceuticals

Glenmark Pharma’s (GNP) in its analyst meet highlighted 1) company’s future growth prospects for achieving double digit revenue growth, 2) plans on launching branded products for margin expansion, 3) becoming a zero net debt company with optimum R&D spends and 4) attaining of +20% RoCE over next 3-4 years. This will hinge on timely niche launches across key markets, out-license deals in Ichnos and scale up in Ryaltris portfolio, in our view. There has been delay in monetization of Ichnos stake sale and despite stake sale in Glenmark Lifescience, debt continues to remain at elevated levels. H1FY23 performance was muted adjusted for milestone income from Ryaltris. We have factored in 8% EBITDA CAGR over FY22-25E. At CMP, stock is trading at 13x FY24E P/E.

Outlook

We recommend ‘Accumulate’ with revised TP of Rs460/share, valuing at 13xSept 2024E P/E. Any potential stake sale in Ichnos and meaningful debt reduction will be key catalyst for stock to re-rate.

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