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Glenmark Pharmaceuticals Ltd. | Q2FY14 Result Update




IndiaNivesh Securities Pvt Ltd


01 Nov 2013





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Glenmark Pharmaceuticals Ltd. | Q2FY14 Result Update Inline with estimates, maintain BUY Company’s core revenue grew 15.6% y-o-y (17.2% sequentially) to Rs 14.51 bn in Q2FY14, inline with our estimates (INSPL est= Rs 14.40 bn). Adjusting for out-licensing income of Rs 118 mn during the quarter, EBITDA grew ~18.6% y-o-y to Rs 3.03 bn (V/s INSPL est= Rs 2.95 bn) . EBITDA margins increased 52 bps y-o- y (93 bps q-o-q) to 20.9% level (V/s INSPL est= 20.6%). Due to higher depreciation of Rs 605 mn in Q2FY14 against Rs 321 mn in Q2FY13 & higher effective tax rate during the quarter company’s core net profit (adj for out-licensing income) was almost flat on yearly basis (grew 10.7% q-o-q) to Rs 1.42 bn in Q2FY14, (V/s INSPL est= Rs 1.59bn). Outlook & Valuations: Considering the revenue growth of the company in the last 5-6 quarters and pipeline in US business, we are of the view that company would carry same growth momentum going forward. As we anticipated US market may report lower growth in FY14 due to delay in approvals & limited opportunities, however we see healthy ramp up in FY15-16E given filings status of the company in the last two years. We expect company to clock core business revenue CAGR of 18.5% during FY13-FY15E to post revenue of Rs 72.37 billion in FY15E. Net profit is expected to grow above 21% CAGR over the same period to report PAT of Rs 9.52 bn in FY15E. We expect company to Report adj EPS of Rs 28 in FY14E & Rs 35.1 in FY15E. At CMP of Rs 540, the stock is trading at P/E multiple of 19.4x & 15.5x of FY14E & FY15E earnings estimates respectively. We maintain BUY rating on the stock with the target price of Rs 636.(Valuing at ~19x of FY15E).

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