Motilal Oswal recommended Neutral rating on Glenmark Pharma with a target price of Rs 430 in its research report dated June 29, 2020.
Motilal Oswal 's research report on Glenmark Pharma
Glenmark Pharma (GNP) ended FY20 in a third consecutive year of earnings decline, albeit at a lower intensity v/s previous years. The outlook is improving, led by cost reduction initiatives in R&D as well as other operating expenses. Reduced price erosion in the US base business, supported by new launches, would further strengthen the earnings trajectory going forward. - We raise our EPS estimate by 3%/8% for FY21/FY22 to factor better traction in the US business / Domestic Formulations and cost rationalization benefits. We value GNP on a 13x 12M forward earnings basis to arrive at price target of INR430. Maintain Neutral as the current valuation adequately factors an earnings upside over the medium term.
We expect a 14% earnings CAGR over FY20-22, led by a sales CAGR of 11%/10% for India/Europe, better prospects for the US business, and improved profitability. We value GNP on a 13x 12M forward earnings basis to arrive at price target of INR430. While the earnings trajectory is improving, we are yet to see meaningful improvement in return ratios. Maintain Neutral.
For all recommendations report, 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.