Glenmark Pharma - Strong quarter; maintain Buy :Anand Rathi

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Glenmark Pharma
Strong quarter; maintain Buy
 Q2FY11 results. Glenmark reported good Q2FY11 figures, with
yoy growths of 22.7% in revenue and 38% in adjusted net profit.
EBITDA margin declined 300bp yoy; qoq however, it improved
150bp to 23.5%. Receivable days have slid to 119 (155 in Sep ’09).
 Growth seen across segments. The generics segment grew at a
robust 27.2% yoy and specialty pharma grew 19.2% yoy. US
generics grew 26.4% yoy fuelled by more products and the launch
of ‘Tarka’ at risk (US$4m-5m revenue in Q2FY11). Indian
branded formulations also grew strongly, at 21.5% yoy, led by
greater market share in cardiac, respiratory and anti-infectives.
 Recovery continues. Glenmark shows clear signs of a recovery
owing to its strong growth in the US and India, the turnaround in
Latin America (Latam) and a significant decline in receivable days.
EBITDA margin has started picking up, to 23.5% (22% in Q1).
 Outlook. We expect the growth momentum to continue, driven
by higher-than-industry growth in domestic formulations, the
launch of niche products in the US and continuous recovery in
Latam. We estimate CAGRs of 17.1% in revenue and 25.5% in
net profit over FY10-13.
 Valuation. At the CMP, the stock trades at 18.5x FY11e and
16.7x FY12e earnings. We retain our target price of `373 and reiterate
Buy.