Motilal Oswal's research report on Glenmark Pharma
Glenmark Pharma (GNP) delivered in-line 4QFY23 operational performance. GNP witnessed robust traction in Europe/RoW/API segment, driving 20% YoY growth in EBITDA for the quarter. The increased working capital requirement for EU/ROW markets has resulted in higher net debt on a QoQ basis. We raise our EPS estimate for FY24/FY25 by 3%/5% to factor in a) increase in Ryaltris sales across multiple markets and expansion into newer markets, b) reduced innovative R&D expenses, and c) superior execution in the UK, Spain, and ROW markets. We value GNP at 12x 12M forward earnings to arrive at a price target of INR580. GNP is making efforts toward a) enhancing domestic formulation (DF) segment prospects through new launches, b) gaining market share as well as adding newer markets in the RoW/EU segment and c) resolving regulatory issues at Monroe/Goa/Baddi. However, we reiterate our Neutral stance as the current valuation adequately factors the upside in the earnings.
Outlook
We raise our EPS estimate for FY24/FY25 by 3%/5% to factor in a) the increase in Ryaltris sales across multiple markets and expansion into newer markets, b) reduced innovative R&D expenses, and c) superior execution in the UK, Spain, and RoW markets. We value GNP at 12x 12M forward earnings to arrive at a price target of INR580.
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