Glenmark Pharma falls 6%; BoAML downgrades to underperform

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26 Aug, 2025 12:21

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Moneycontrol Bureau

Shares of Glenmark Pharma plunged more than 6 percent intraday Monday after brokerage Bank of America Merrill Lynch (BoAML) downgraded the stock to underperform with revised target price of Rs 1,200 apiece.

The stock rallied 56 percent in the last six months. The brokerage believes Glenmark is fully valued at its target September 2017 P/E of 21x.

Yet, BoAML valued stock at a 10 percent discount to large peers, given its relative business size compared to large peers, lower return profile and leveraged balance sheet against peers.

It believes the FY17 expected price-to-earnings at a 25 percent premium to its one-year average priced in strong growth momentum in the US as well as India, margin expansion in the core business, and potential improvement in the balance sheet. It expects company's core profit after tax to double over FY15-18, driven by 19 percent sales CAGR and 300 basis points margin expansion over the same period.

The brokerage also expects its US business (30 percent of total revenue) to double over FY15-18, driven by niche launches and pick-up in approvals (7 approvals since April 2015).

According to BoAML, degrowth in Russia/Venezuela may still have an overhang on earnings. Glenmark drives 10 percent of its sales and 16-18 percent of its profit from Russia (7 percent of FY15 sales - USD 55 million) and Venezuela (3 percent of sales - USD 45 million) which is exposed to currency volatility in the near term.

It said the company has to repatriate USD 30 million from its Venezuelan subsidiary and in order to curtail its exposure to Venezuela, the company has started recognising its sales at VEF 15 per USD against prevailing rate of VEF 6.4 per USD.

Monetisation of NCE pipeline is a risk, it believes.

At 11:22 hours IST, the scrip of Glenmark Pharma was quoting at Rs 1,164.80, down Rs 60.55, or 4.94 percent on the Bombay Stock Exchange.Posted by Sunil Shankar Matkar