Motilal Oswal's research report on Glenmark Pharma
Adjusted for the milestone-related receipt of income for Ryaltris and COVID- led inventory provision, Glenmark Pharma (GNP) delivered lower-than-expected earnings in 2QFY23. The domestic formulation (DF) segment performed betterthan-industry, while the US/ROW businesses marred profitability. We cut our FY23/FY24 earnings estimates by 13%/5% factoring in: a) lack of filings for the US market, b) intensified price erosion in the US base portfolio, and c) increased opex and interest outgo. We value GNP at 10x 12M forward earnings to arrive at our TP of INR420. The superior execution in DF was outweighed by moderation in the US business. This coupled with higher operational cost towards marketing/ logistics would affect profitability over the medium term. Considering its subdued 9% earnings CAGR over FY22-24E and valuation adequately factoring the same, we maintain our Neutral rating on the stock.
We cut our earnings estimate for FY23/FY24 by 13%/5% factoring, a) lack of filings for US market, b) intensified price erosion in US base portfolio, and c) increased opex and interest outgo. We value GNP at 10x 12M forward earnings to arrive at price target of INR420.
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