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Glenmark Pharmaceuticals | Concall Update




IndiaNivesh Securities Pvt Ltd


30 Jan 2013





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Glenmark Pharmaceuticals Ltd.|Q3FY13 Concall Update Adjusted numbers were slightly above estimates: Adjusting for out-licensing income of Rs 493 million in Q3FY13 & Rs 238 million in Q3FY12 and for forex gain of Rs 40 million in Q3FY13 (reported in other expenditure) & against forex loss of Rs 1.02 billion in Q3FY12 (forex gain of Rs 150 million in Q2FY13) , Glenmark’s reported financials were slightly above our estimates. Revenue grew 32.2% y-o-y to Rs 13.32 billion (INSPL est = 12.76 billion), EBITDA grew 47.4% y-o-y to Rs 2.67 billion (V/s INSPL est= Rs 2.59 billion) and net profit grew 30% y-o-y to 1.60 billion (V/s INSPL est=Rs 1.47 billion). EBITDA margins increased ~200 bps y-o-y (declined 38 bps q-o-q) to 20% level (V/s INSPL est= 20.3%). Outlook & Valuations: Considering the revenue growth of the company in last few quarters and ramp up in US business, we are of the view that company would carry same growth momentum going forward. Further, new launches, including Mupirocin Calcium Cream & 180 day’s exclusivity of Lipocream are likely to maintain the growth momentum in US market. In 9MFY13 company has received out licensing income of Rs 493 million from Forest Lab. Likely withdrawal of Revamilast from NCE pipeline may have negative sentiments for R&D efforts of the company. We expect company to clock core business revenue of 26% CAGR over FY12-FY14E (excluding out-licensing income) to post revenue of Rs 58.80 billion in FY14E. core net profit is expected to grow above 35% CAGR over the same period to report PAT of Rs 7.23 billion in FY14E. We expect company to Report adj EPS of Rs 20.64 in FY13E & Rs 26.64 in FY14E. At CMP of Rs 490, the stock is trading at P/E multiple of 23.7x & 18.4x of FY13E & FY14E earnings estimates respectively. Earlier we had buy recommendation on the stock with the target price of Rs 465 which has been achieved. Currently we recommend to HOLD on the stock with the target Price of Rs 506. (Valuing at 19x of FY14E earnings estimates).

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