Hold Glenmark; target of Rs 780: Edelweiss

Edelweiss's research report on GlenmarkGlenmark Pharmaceuticals’ (GNP) Q4FY16 revenue grew 31% YoY, while EBITDA declined 24% YoY and APAT declined 40%. All geographies, including US, posted impressive growth. The company also recognised entire export incentives for the year in Q4 in ‘other operating income’. Low gross margin (down 200bps QoQ), high R&D costs (11%), forex loss due to Venezuela (INR 850mn) and one‐off legal cost (INR650mn) led to weak margins. The company guided for FY17 revenue growth of >25%, driven by Zetia and Nitroglycerin. However, balance sheet still holds ~USD45mn worth of Venezuelan assets at VEF10/USD, which could be written down. We cut FY17/18E EPS by 14%/15%. Maintain ‘HOLD’. We expect a much better FY17 led by Zetia and Nitroglycerin launches. Current valuation is 18x FY18 EPS. We maintain ‘HOLD/SP’ with target price of INR780 (based on 16x FY18E EPS).

For all recommendations, click here Disclaimer: 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.

Read More