Buy Glenmark Pharma; target Rs 606: Firstcall Research

Firstcall Research report on Glenmark Pharma

"For the second quarter ended Sep 30, 2013, Glenmark Pharma's consolidated revenue was at Rs 14630.06 Mn (USD 235.62 Mn) as against Rs. 12551.91 Mn (USD 227.89 Mn) an increase of 16.56 percent. Revenue from the generics business was at Rs.7106.55 Mn (USD 114.20 Mn) as against Rs. 5800.78 Mn (USD 105.27 Mn), growth of 22.51  percent. The Specialty formulation business excluding out-licensing revenue was at Rs. 7405.41 Mn (USD 119.42 Mn) as against Rs. 6751.13 Mn (USD 122.62 Mn) for the corresponding previous quarter, recording a growth of 9.69 percent. Net Profit (after taxes and minority interests) for the second quarter was Rs 1542.97 Mn as compared to Rs. 1567.52 Mn for the previous corresponding quarter."

"During the quarter, the Company has filed six ANDA's with the U.S. FDA, and plans to file an additional ten to fifteen applications in the forthcoming quarters. The Company's European business continued to expand through product sales and licensing income and by expanding its presence through more partners (licensing and distribution) in the European countries."

"Glenmark's short-term and long-term outlook is encouraging for several reasons. On the discovery front, the pipeline is progressing well with 4 molecules in clinics. The company will also continue with its approach of outlicensing its molecules. On the generics front, with high value patented drugs going off patent in the coming years, there is huge potential for the generics business. Glenmark is actively increasing its base in major enerics
markets of US and Western Europe. At same time, the specialty business will continue to build differentiated pipelines in rest of the world markets, notably the 'Pharmerging' markets. Focus will be on building size and scale organically. The Company has also put multiple systems and processes in place to manage its complex operations and instill efficiencies across the value chain. Glenmark will also continue to build capabilities and nurture a talent pool with diverse skills sets to deliver continuous results."

"Over FY2012-15E, we expect the company to post a CAGR of 18 percent and 17 percent in its top-line and bottom-line respectively. Hence, we recommend 'BUY' for 'GLENMARK PHARMACEUTICALS' with a target price of Rs 606 on the stock," says Firstcall Research report.

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