Motilal Oswal's research report on Glenmark Pharma
Glenmark Pharma (GNP) delivered better-than-expected 1QFY23 result fueled by better operating margin. While the domestic formulation (DF; ex-COVID basis) and ROW markets grew strongly, the US segment saw steep YoY decline. We tweak our EPS estimates by +6%/+3% for FY23/FY24, respectively, to factor in: a) robust performance in consumer care business, better outlook in ROW markets and improved operating leverage. We value GNP at 10x 12M forward earnings to arrive at our TP of INR420. We expect 12% earnings CAGR over FY22-24, led by 4% sales CAGR and 100bp margin expansion because of: a) better-than-industry growth in DF, b) portfolio expansion and c) capturing newer markets in the EU region.
While the earnings outlook is gradually improving for FY22-24E v/s flat YoY earnings in FY22, we retain our Neutral rating on limited upside from current levels .
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