Accumulate Glenmark Pharmaceuticals; target of Rs 733: Prabhudas Lilladher
Prabhudas Lilladher’s research report on Glenmark Pharmaceuticals
Glenmark (GNP) sales and adj. EBITDA and PAT were Rs22.2bn, Rs3.3bn and Rs2.1bn respectively vs our estimates of Rs21.4bn, 1.1bn and Rs83mn respectively in Q2FY18. The higher revenue was due to growth of 49% YoY in EU sales while beat in headline profits were due to strong cost controls in COGS, R&D exps and other operating overheads. Employee costs however increased by 45% QoQ due to yearly bonus payments of Rs1.2bn and salary increment costs of Rs0.4bn in Q2FY18. Core US sales grew 8.4% QoQ to US$ 113m and domestic sales grew 15.3% QoQ and 10% YoY in H1FY18.
We expect GNP to be similarly impacted due to higher uncertainty in pharma industries of key geographies. We are reducing assigned PE to 16x (from 18x) on FY19 earnings. We maintain our recommendation ‘Accumulate’ while reduce TP to Rs733 (from Rs825).
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