Glenmark Pharmaceuticals - Q2FY21 Result Update - ICICI Direct

Q2 revenues grew 4.9% YoY to Rs. 2953 crore with 17.2% YoY growth in domestic sales to Rs. 1051 crore due to additional contribution from Fabiflu (favipiravir) being partly offset by 11.3% decline in US to Rs. 752 crore. Europe business grew 11.6% YoY to Rs. 318 crore. RoW markets grew 9.1% YoY to 381 crore while the API segment grew 19.1% YoY to Rs. 321 crore. EBITDA margins improved 272 bps YoY to 18.7% mainly due to lower other expenditure. EBITDA grew 22.7% YoY to Rs. 553 crore. Adjusted PAT de-grew 9.7% YoY to Rs. 231 crore. Delta vis-à-vis EBITDA was due to lower other income and higher tax rate. Exceptional items in Q2FY21 were Rs. 3.14 crore on gain arising from sale of Vwash brand to HUL.

Valuation & Outlook

Despite facing Covid-related challenges in Q2FY21, the company reported a stable topline while EBITDA was higher mainly on account of reduced travel & promotional spend. While domestic sales reported robust growth supported by Fabiflu sales, US business was impacted 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. Going ahead, the management expects margins to improve due to cost rationalisation measures and decline in R&D expenses as percentage of sales. Glenmark had earlier shelved API monetisation plan and plans to reduce debt through internal accruals, pipeline monetisation (ICHNOS) and divestment of non-core business. On the capex front, although things are looking a bit strained, the management expects some moderation. We believe reduction of debt, improvement in free cash flow and margins are key events to watch. We arrive at our target price of Rs. 635 based on 14x FY23E EPS of Rs. 45.2.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Glenmark_Q2FY21.pdf

Shares of GLENMARK PHARMACEUTICALS LTD. was last trading in BSE at Rs.485.6 as compared to the previous close of Rs. 486.4. The total number of shares traded during the day was 14271 in over 443 trades.

The stock hit an intraday high of Rs. 490 and intraday low of 483.45. The net turnover during the day was Rs. 6946177.

Source : Equity Bulls

Keywords