Glenmark Pharmaceuticals Ltd. share price target

Burdened by high leverage, continuous investments and setbacks in select geographies like Venezuela, the Glenmark (GNP) stock has significantly underperformed over the last two years. However, with the large gZetia cash flow coming in and monetisation of its novel pipeline, we expect debt reduction to play out and be a key trigger for the stock to re-rate.

We upgraded Glenmark to BUY (Oct 28, 2016), as we believed it is in sweet spot given improvement in its key markets (US, India, Russia) posted 18% revenue growth 9MFY17 (ex-gZetia)

Revenue rose by 13.33% to Rs. 2462.95 Cr in Q3FY17 when compared to the previous quarter. Also, it rose by 41.03% when compared with Q3FY16.

Strong Quarter; Concern of Debt Overhang Recedes Glenmark Pharmaceuticals (GNP) has delivered strong performance in 3QFY17 on the back of strong growth in the US business owing to launch of gZetia with 180-days exclusivity. Its revenue from the US business doubled to US$184mn from US$94mn in 3QFY16 (US$115mn in 2QFY17) primarily due to 2-month's gZetia sales (our estimate: US$60mn). API sales rose by 32% YoY due to Olmesartan API supplies to Mylan. Core EBITDA margins (excluding gZetia) remained weak owing to muted growth in domestic business (up 6% YoY), higher R&D; spend (11% of sales) and other oneoff expenses. Its PAT grew by 1.7x YoY to Rs4.6bn (vs. our estimate of Rs4.8bn)....

In 3QFY17, GNPs US business more than doubled to Rs 12.3bn, driving 41%YoY growth in overall top line. This was largely driven by sales of gZetia under 180 day?s exclusivity. However, bumper sales are likely to stay only till 1QFY18, post which gZetia will become more competitive market for GNP.

ICICI Securities Ltd | Retail Equity Research Revenues grew 43% YoY to | 2535 crore (I-direct estimate: | 2239 crore) mainly due to 102% YoY growth in the US to | 1231 crore (Idirect estimate: | 865 crore) mainly due to gZetia exclusivity EBITDA margins improved 934 bps YoY to 30.2% (I-direct estimate:...

During the GNP analyst meet, the management rolled out its ten year strategic roadmap for the company. Going forward, the focal points for GNP will be complex generics, specialty products and novel candidates.

Our meeting with Mr. Glenn Saldanha (CMD, Glenmark Pharma) reaffirms our view that US, India and Russia (key businesses comprising ~70% of H1FY17 sales) have strong growth visibility which would help achieve FY19 EBITDA guidance of 23% (vs.20% in H1FY17).

ICICI Securities Ltd | Retail Equity Research Revenues grew 19% YoY to | 2224 crore (I-direct estimate: | 2226 crore) mainly due to 29% YoY growth in the US to | 771 crore (Idirect estimate: | 762 crore). India business grew 11% YoY to | 675 crore (I-direct estimate: | 596 crore) EBITDA margins declined 126 bps YoY to 20.2% (vs. I-direct estimate: 20.0%) due to higher other expenditure. EBITDA increased 12% YoY to | 449 crore (I-direct estimate: | 445 crore) Net profit increased 12% YoY to | 224 crore, (I-direct estimate: | 263...

Buoyant performance of the US, Russia/CIS and API segments led to a 16% YoY growth in the top line. However, a sharp increase (up 21%YoY) in the staff cost due to incremental incentives kept EBITDA margins below expectations at 18.3% in 2Q. PAT growth too was sluggish at 11% YoY only.