Hold Glenmark Pharma; target of Rs 780: Edelweiss

Glenmark Pharmaceuticals (GNP) reported in-line performance for Q1FY17 with YoY revenue/EBITDA/PAT growth of 18%/5%/14%. Performance was led by strong growth in US, Europe and RoW markets, while India and LatAm were muted. Key trigger going ahead is launch of Zetia (USD1.5bn) in Dec’16 as an FTF, which may yield USD150mn during exclusivity. As highlighted by us, GNP is set to benefit from its complex generic pipeline which includes Zyvox (USD500mn), Renvela/Renagel (USD1,400mn) and Welchol (USD800mn) in FY17/18. Debt continued to rise during the quarter with gross debt increasing by INR2.8bn. Key risk is that balance sheet still holds USD45mn worth of Venezuelan assets at VEF10/USD, which could be written down.  

We expect a much better FY17 led by US launches. Current valuation is 17x FY18E EPS. We maintain ‘HOLD/SP’ with target price of INR780 (based on 16x FY18E EPS).For all recommendations, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.