Glenmark Pharmaceuticals Ltd. share price target

Weak Quarter; Higher Price Erosion in US Remains an Overhang Glenmark Pharmaceuticals (GNP) has delivered a weak performance in 4QFY17 due to lowerthan-expected US sales at US$149mn (vs. our estimate of US$190mn). Despite gZetia's 180days exclusivity, sales grew by just 9% YoY to Rs24.3bn owing to~15% price erosion in US base business, lower gZetia sales (~US$ 50mn vs. our estimate of ~US$ 95mn), and weak sales in India and Europe. EBITDA margin declined by 1,210bps QoQ on lower gZetia sales, ~Rs740mn forex loss and higher R&D; spend at 14.8% of sales from 10.9% in Q3FY17. Adjusting for forex loss, margin stood at 21% (vs. reported 18%), while adj. PAT stood at Rs5bn on lower tax (deferred tax on lower gZetia sales and MAT credit). Though the Management looks forward to improvement in US business in FY18 owing to new launches in dermatology segment, but it expects price...

Glenmark's Q4FY17 results were disappointing, revenues and PAT was below our expectation by 11.5% and 7.3% respectively, led by lower than expected revenues from all geographies except US and India. While launch of gZetia was for the full quarter, poor performance of the molecule led to pain at the EBITDA margins, however, extraordinary income cushioned the PAT. Adj PAT was below our estimates by 52%. Revenue increased 6.5% YoY to Rs24.6 bn, EBITDA grew 47.1% YoY to Rs4.4 bn while Adj PAT rose 96.4% YoY to Rs2.8 bn and reported PAT rose 278% YoY to Rs5.4 bn for Q4FY17. For FY18, Glenmark has guided a slower than expected pick up in gZetia, however, remains...

Glenmarks (GNP) 4QFY17 performance was disappointing on all counts. While overall top line numbers were in line with expectations, sales from the US segment and gZetia were not. The EBITDA margin came in at 20.5%, well below estimates.

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.