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Last Updated : Aug 20, 2019 03:40 PM IST | Source: Moneycontrol.com

Buy Glenmark; target of Rs 500: HDFC Securities

HDFC Securities is bullish on Glenmark has recommended buy rating on the stock with a target price of Rs 500 in its research report dated August 16, 2019.

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HDFC Securities' research report on Glenmark


performance was driven by weak traction reflected in all international markets. In-line with expectations, the US business performed poorly with US$ 105mn revenues, flat YoY. gMupirocin sales continued to decline on increased competition. Still, the mgmt is confident of achieving single-digit growth in FY20E. With 3 limited competition launches in 2HFY20, we model a 6% CAGR over FY19-21E. The domestic sales registered a 13% YoY growth during the quarter. In India, Glenmark continues to deliver strong performance supported by healthy growth in Anti-diabetes, Respiratory and Derma therapies. Expect the co to keep out-performing the IPM with a chronic-heavy portfolio and achieve a 13% CAGR (FY19-21E). In other segments, EU, RoW, LATAM and API grew at 10.5/5.4/-16.9/9.8% YoY respectively. The growth in LATAM and RoW markets is likely to recover in the subsequent quarters on the back of new launches. EBITDA declined 1/6% YoY/QoQ to Rs 3.4bn on lower US sales. Margin was 14.7% (-130/+51bps YoY/QoQ). Due to higher interest cost, lower other income and higher tax, PAT declined 53/32% YoY/QoQ to Rs 1.0bn.


Outlook


Glenmark delivered sub-par numbers in 1QFY20 and only the India segment was able to impress with the highest growth among listed-peers. Valuations are as low as 15/12x FY20/21E P/E, while the India business alone is valued at Rs 450/sh. We believe the post-result fall was an overreaction. Re-iterate BUY with a revised TP of Rs 500 (16x FY21E EPS).

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First Published on Aug 20, 2019 03:40 pm
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