Glenmark Pharmaceuticals - Q4FY20 Result Update - ICICI Securities

Q4FY20 revenue grew 8% YoY to Rs. 2768 crore mainly due to ~29% growth in Europe business to Rs. 412 crore and 14% growth in domestic sales to Rs. 765 crore. US business stayed flattish (down 1% YoY) at Rs. 762 crore. EBITDA margins improved 262 bps YoY to 16.8% due to lower other expenditure. EBITDA grew 27.9% YoY to Rs. 466 crore. Adjusted PAT grew 16% YoY to Rs. 187 crore. Delta vis-à-vis EBITDA was due to higher depreciation.

Valuation & Outlook

FY20 revenues grew 7.9% YoY to Rs. 10641 crore whereas EBITDA margins remained stable at 16.0%. Topline growth was mainly attributable to 15.3% growth in domestic sales driven by Remogliflzin ramp-up and continuous market share gain in key therapeutics. Europe business also grew 11.4% YoY while US business remained flat due to stoppage of Ranitidine and sharp decline in dermatology portfolio. Operationally, barring the US, other geographies are, more or less, looking stable led by domestic formulations. The domestic consumer segment is also growing strong. Going ahead, the management expects margins to improve due to a decline in employee and R&D expenses as percentage of sales. The company had earlier shelved API monetisation plan and plans to reduce debt through internal accruals, pipeline monetisation and divestment of non-core business. On the other hand, higher capex (despite guidance of lower spend vis-à-vis FY20) and possible working capital strain are main deflators. We believe reduction of debt, improvement in free cash flow and margins are key to re-rate the stock. We arrive at our target price of Rs. 510 based on 14x FY22E EPS of Rs. 36.6.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Glenmark_Q4FY20.pdf

Shares of GLENMARK PHARMACEUTICALS LTD. was last trading in BSE at Rs.435.2 as compared to the previous close of Rs. 450.2. The total number of shares traded during the day was 1664591 in over 21169 trades.

The stock hit an intraday high of Rs. 448.95 and intraday low of 424. The net turnover during the day was Rs. 729744687.

Source : Equity Bulls

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