Buy Glenmark Pharmaceuticals - Destimoney

Glenmark Pharmaceuticals (GNP), incorporated in 1977, is a global research & development driven integrated pharmaceutical company. It has two main business divisions i.e. Specialty and Generics. The company's integrated business has three API plants, ten finished dosage plants and six research facilities.

- Despite being a late entrant in branded generics market, GNP has registered a CAGR of 25.6% in top line and 13.2%on EBITDA from FY07 onwards.

- GNP is expanding in both generics and specialty pharma businesses to drive long term growth. On the R&D front, thecompany has a pipeline of one new biologic entities (NBEs) and five new chemical entities (NCEs) molecules in clinicaltrials including the in-licensed molecule "Crofelemer". Out of the total six NCEs and NBEs currently in pipeline, onemolecule is in Ph-III, three are in Ph-II, one is in Ph-I and one is in pre-trials stage. We currently do not assign anysuccess rates to these molecules until they are proved and passed through clinical trials.

- The company reported a 34% increase in consolidated revenues at Rs. 13,812 mn, excluding out licensing income in Q3-FY13. The Generics business grew at 33% at Rs. 5,809 million and Specialty formulation business excluding out-licensing revenue grew 31.22% at Rs. 7,357 mn.

- The company has witnessed increase in overall debt on consolidated levels due to increased working capitalrequirements and exchange rate fluctuations to the tune of Rs. 400 to 450 mn. The management has guided to lowerdebt in the coming quarters but has not provided clear guidance on the quantum and timing of the same.

- Having a global generics business, a focus on niche segments coupled, robust research & development pipeline with alarge addressable market. We expect GNP to report a CAGR growth of 22.8% in top line for next two years.

- We initiate coverage on Glenmark Pharmaceuticals Ltd. (GNP) and assign BUY rating with a target price of Rs. 604 per share.

Source : Equity Bulls

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