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Glenmark Pharma
In line quarter; maintain Buy
Glenmark’s 3QFY11 results paralleled our estimates. Revenue
grew 17% yoy, to `7.5bn (vs. our estimate of `7.6bn), while
adjusted net profit grew 16.5% yoy to `1.1bn. EBITDA margin
declined 50bps yoy to 22.2%, lower than our estimate of 25%.
Specialty formulations – Key driver. Specialty formulations
grew 33.7% yoy, led by robust 29.7% growth in Indian
formulations and strong growth in LatAm, EU and RoW markets
on a low base. Management has guided for continuing 20-25%
growth in Indian formulations.
Generics saw subdued growth. Generics grew only 6.5% yoy
mainly due to decline in APIs and Argentina (oncology). US
growth was subdued at 8.2% yoy despite exclusivity sales of Tarka,
indicating flat growth in base US generics.
Change estimates to factor in discontinued sales of Tarka.
The New Jersey district court ruled against Glenmark’s challenge
on the Tarka patent and Glenmark is likely to have stopped
further sales of Tarka. Hence, we lower our FY11-13e revenue by
0.8-2% and net profit by 5-9%.
Valuation and risks. We retain our Buy recommendation on the
stock. We reduce our price target to `392 from `427 earlier. Risks:
unfavorable judgment on Tarka litigation and failure of NCE
molecules.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Glenmark Pharma
In line quarter; maintain Buy
Glenmark’s 3QFY11 results paralleled our estimates. Revenue
grew 17% yoy, to `7.5bn (vs. our estimate of `7.6bn), while
adjusted net profit grew 16.5% yoy to `1.1bn. EBITDA margin
declined 50bps yoy to 22.2%, lower than our estimate of 25%.
Specialty formulations – Key driver. Specialty formulations
grew 33.7% yoy, led by robust 29.7% growth in Indian
formulations and strong growth in LatAm, EU and RoW markets
on a low base. Management has guided for continuing 20-25%
growth in Indian formulations.
Generics saw subdued growth. Generics grew only 6.5% yoy
mainly due to decline in APIs and Argentina (oncology). US
growth was subdued at 8.2% yoy despite exclusivity sales of Tarka,
indicating flat growth in base US generics.
Change estimates to factor in discontinued sales of Tarka.
The New Jersey district court ruled against Glenmark’s challenge
on the Tarka patent and Glenmark is likely to have stopped
further sales of Tarka. Hence, we lower our FY11-13e revenue by
0.8-2% and net profit by 5-9%.
Valuation and risks. We retain our Buy recommendation on the
stock. We reduce our price target to `392 from `427 earlier. Risks:
unfavorable judgment on Tarka litigation and failure of NCE
molecules.
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