Glenmark Pharmaceuticals Ltd. share price target

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.

US Business: Improvement in US business (up 25% yoy & 10% qoq) is driven by multiple factors such as: strong gain in market share in gCrestor, ramp-up in recently launched products, gMupirocin sales improvement, strong traction in derma (new launches: T-Cream, gDiclofenac, gLidocaine) and other products. Management believes that the price erosion in base business stood at 10% on account of increased approvals by the US FDA. It further expects most future launches (till FY19E) would be from derma segment, as it believes that post FY19E, the Company will see more launches in complex generic space (injectables)....

Total revenues for Q2FY17 were up 16.48%/14.4% YoY/QoQ at Rs22.2 bn in-line with our estimates triggered by growth across key geographies, however, entire EM ex-India continued to get impacted on account of currency devaluation . EBITDA margin declined 97bps YoY and up 67bps QoQ from 21.1% in Q2FY16 to 20.2% in current quarter mainly due to the continuing pricing pressure in the base business. It was down 120bps against our guidance was due mainly to higher than expected Staff Costs (payment of variable pays, annual increments and addition in employees). But we believe an improvement in the margins attributable also to the better product mix....

Glenmarks strong top line performance (16% YoY) and sequential improvement in profitability led to 24% YoY earnings growth in 1QFY17. Revenues increased to Rs 18.8bn with US business growing at 24% YoY.

Key highlights: Revenues were 3% below our estimates to Rs 19.43bn (+18% yoy). While US sales of US$ 104mn (+24% yoy) was in line of our estimates and Domestic formulations outpaced industry growth, the weak show by Latin America markets led to miss in sales estimates. Visible pricing pressure in US & higher employee cost caused 270bps negative surprise in operating margin at 19.5% (estimated 22.2%) that resulted in 15% below expected EBITDA at Rs 3.79bn. Thanks to forex gain of Rs700mn that supported PAT at Rs 2.18bn (10% below estimated). However, the tax rate was higher at 35% (vs 25% normal). The core earnings (adjusted forex gain and abnormal taxes) were 18% below expectation.Phillip Capital now value GNP at Rs 1000 i.e.19x FY18 EPS, implying 18% potential upside. Re?iterate BUY with a lowered TP of Rs 1000.

ICICI Securities Ltd | Retail Equity Research Revenues grew 17.9% YoY to | 1943.1 crore (I-direct estimate: | 2021.9 crore) mainly due to 24.4% YoY growth in the US to | 698.2 crore (I-direct estimate: | 698.8 crore). India business grew 10.4% YoY to | 513.8 crore (I-direct estimate: | 520.2 crore) EBITDA margins declined 230 bps YoY to 19.5% (I-direct estimate: 21.1%) due to lower gross margins, higher employee cost. EBITDA rose mere 5.5% YoY to | 379.1 crore (I-direct estimate: | 427.0 crore)...

Glenmark Pharmaceuticals' (GNP) Sales, EBITDA & PAT stood at Rs19.4bn, Rs3.8bn & Rs2.2bn, respectively in 1QFY17. Revenue from US business (~37% of sales) rose 18% yoy to US$104mn in 1QFY17 (vs. US$97mn in Q4FY16 & US$89mn in Q1FY16) due to new product approvals. Revenue from India business (~27% of sales) grew by just 10% yoy to Rs5.1bn due to adverse impact of New Pricing Policy and ban on several fixed dose combinations. Revenue from semi-regulated markets (10% of sales) grew 23% yoy due to strong growth in Russia (50% yoy in CC terms). LatAm (~8% of sales) degrew 29% yoy due to negligible contribution from Venezuela and weak performance in Brazil...

off the EBITDA was ~Rs. 460 crore i.e. 20% of revenues. Adjusted for these, margins improved 310bps. Adjusted net profit grew Avg. daily volume (1yr. on NSE)...