Buy Glenmark Pharma; target of Rs 1100: Axis Direct

Glenmark’s (GNP) strategic blueprint highlights good progress on its R&D pipeline (complex gx, specialty & novel). It plans to scale-up its complex gx portfolio via strengthening derma, respiratory (gAdvair expected to be filed in CY18) pipeline and recently in-licensed deals (for gAbraxane, etc). It plans to file 9 NDA/ BLA across its specialty and novel pipeline with focus on respiratory, oncology and derma. While GNP’s R&D expenses have scaled up from 6% in FY12 to 10.4% in H1FY17 (over USD 500mn), it expects out-licensing deals/ income to pick up which would help in funding its specialty & novel R&D pipeline.

Despite sector headwinds, GNP’s improved visibility on R&D initiatives positions it for 15-20% rev. growth coupled with margin expansion. We thus raise TP to Rs 1,100 (20x Sep’18E EPS; 19x earlier). BUY.