Hold Glenmark Pharmaceuticals; target of Rs 410: ICICI Direct
ICICI Direct’s research report on Glenmark Pharmaceuticals
Q1 revenues grew 7.3% YoY to rs 2322.9 crore (I-direct estimate: rs 2386.1 crore) mainly due to 13.4% YoY growth in domestic formulation to rs 752.2 crore (I-direct estimate: rs 729.6 crore). US revenues grew 3.9% YoY to rs 730.9 crore (I-direct estimate: rs 745.8 crore). EBITDA margins contracted 130 bps YoY to 14.7% (I-direct estimate: 17.5%) mainly due to higher other expenditure. EBITDA de-grew 1.4% YoY to rs 341.9 crore (I-direct estimate: rs 417.6 crore). Net profit de-grew 53.1% YoY to rs 109.3 crore (I-direct estimate: rs 207.1 crore). Delta vis-à-vis EBITDA was mainly due to lower other income (rs 1.7 crore vs. rs 138.2 crore).
We expect possible monetisation of APIs or non-core businesses and proposed unlocking of innovation business to reduce debt as key catalyst for future re-rating of the stock. Our new target price is rs 410 based on 12x FY21E EPS of rs 34.2.
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