Q3FY21 Result Update - Glenmark Pharmaceuticals - ICICI Direct

Q3 revenues grew 1.9% YoY to Rs. 2787 crore with 11.8% YoY growth in domestic sales to Rs. 882 crore supported by Fabiflu (favipiravir) sales being partly offset by 2.4% decline in US to Rs. 780 crore. Europe business grew just 1.4% YoY to Rs. 313 crore amid enhanced lockdown measures. RoW markets de-grew 1.6% YoY to Rs. 336 crore whereas API segment grew 22.1% YoY to Rs. 320 crore. EBITDA margins improved 293 bps YoY to 19.0% mainly due to lower other expenditure, better gross margins. EBITDA grew 20.5% YoY to Rs. 530 crore. Adjusted PAT grew 23.0% YoY to Rs. 235 crore. Exceptional items in Q3FY21 were Rs. 13.4 crore on gain arising from 1) transfer of a) Vwash & b) Momat brands, 2) sale of IP assets, 2) reimbursement of one-time costs.

Valuation & Outlook

Despite facing Covid-related challenges in various geographies in Q3, the company posted a stable topline while EBITDA was higher mainly due to reduced travel & promotional spend. While domestic sales reported strong growth supported by Fabiflu sales, US business was impacted by decline in dermatology portfolio. Operationally, barring 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 debt reduction, improvement in free cash flow and margins are key events to watch. We maintain BUY and arrive at our target price of Rs. 635 (unchanged) based on 13x FY23E EPS of Rs. 48.9.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Glenmark_Q3FY21.pdf

Shares of GLENMARK PHARMACEUTICALS LTD. was last trading in BSE at Rs.490.65 as compared to the previous close of Rs. 504.2. The total number of shares traded during the day was 149159 in over 3960 trades.

The stock hit an intraday high of Rs. 511.6 and intraday low of 488.15. The net turnover during the day was Rs. 73719819.

Source : Equity Bulls

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