Motilal Oswal's research report on Glenmark Pharma
Glenmark Pharma (GNP) delivered a miss on 2QFY26 earnings, adjusted for a one-time upfront payment received from Abbvie. The miss was largely driven by a severe impact on the domestic formulation (DF) business following the GST transition. Adjusting for ISB2001 deal-related income (INR45b for 2QFY26) and associated expenses (INR8.3b), GNP reported an operational loss of INR8.7b for the quarter, representing its highest-ever quarterly operational loss. DF sales significantly reduced in 2QFY26 due to uncertainty in the distribution channel following the announcement of GST-related changes on 15th Aug’25. In addition, GNP undertook corrective measures to manage inventory levels at the consolidated level. The company also discontinued its pre-collection arrangement with debtors across geographies, resulting in an increase in debtors over the past 6M.
Outlook
We cut our earnings estimate by 65%/5%/4% for FY26/FY27/FY28 to factor in: a) the transient impact on the DF business due to GST, b) geopolitical uncertainties in emerging markets, and c) ongoing regulatory issues at certain sites impacting the product approval cycle for the US business. We value GNP at 24x (vs 27x earlier) to arrive at a TP of INR2,170.
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