Glenmark -Turning around in style :: Centrum,

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Turning around in style
Glenmark Q2 results were largely in-line with our
estimates with healthy growth in all its major markets.
Our bullish stance on its turnaround story seems
justified, and we maintain our BUY rating.
􀂁 Growth across markets boosts topline– Net Sales
grew 22.7% YoY to Rs7.2bn, slightly higher than our
estimate of Rs7bn. This was aided by healthy growth in
almost all major markets where it is present. It notched a
growth of 26% in US generics (aided by exclusivity for
Tarka sales) and 22% in the domestic business, its two
largest markets. Even the API business grew by 30%,
which was a positive surprise considering the low
growth rates in this segment across the sector.
􀂁 Margin pressure seen– Higher material costs (due to
Rupee appreciation) and staff expenses due to major
changes in the customer-mix brought down the EBIDTA
margin by 300bps YoY to 23.5%.
􀂁 Adjusted PAT in-line with estimates – The bottomline,
adjusted for foreign exchange gains of Rs120mn, grew
26.5% YoY to Rs1bn, in-line with our estimates.
􀂁 Strong product pipeline – With 8 new products set for
launch in the US this fiscal, 13 Para IV FTF opportunities
in the kitty and appreciable progress on the NCE & NBE
portfolio, the product pipeline looks stronger than ever.
􀂁 Maintain Buy – At the CMP, the stock currently trades
at 20.2x FY11E and 16x FY12E earnings. We maintain
BUY rating on the stock.