Prabhudas Lilladher's research report on Glenmark Pharmaceuticals
Glenmark Pharma’s (GNP) Q4 EBITDA of Rs6.1bn (down 2.5% QoQ) was largely in-line with our estimates. However, there has been delay in monetization of Ichnos stake sale. Balance sheet has also seen deterioration with net working capital (NWC) days increasing to 157 from 111 days in FY22. Despite stake sale in Glenmark Lifescience and certain brand divestments in domestic formulation, debt continues to remain at elevated levels. Overall FY23 performance was muted, adjusted for milestone income from Ryaltris. We have factored in 9% EBITDA CAGR over FY23-25E. At CMP, stock is trading at 18x FY24E P/E. Any potential stake sale in Ichnos and meaningful debt reduction will be key catalyst for re-rating. Downgrade to ‘Reduce’.
Outlook
We downgrade our rating to ‘Reduce’ from Accumulate with revised TP of Rs570/share (Rs460 earlier) valuing at 15x FY25E EPS, given recent up in stock price and muted outlook on earnings.
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