Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
FY12 is off to a strong start with 1Q revenue and PAT increasing 27% and 23%, respectively, and
the core EBITDA margin expanding 90bp yoy to 24.5%. Improvement in the working capital cycle
and lower debt are other positives. The R&D pipeline is seeing good traction. We raise our TP to
Rs375. Buy.
Strong start to the year
Glenmark reported 1QFY12 revenues of Rs8.7bn (up 27% yoy as per IFRS), 6% above our
forecast, led by growth in key markets. US and India revenues (about 28% each of FY11
revenues) increased 37% and 20% yoy, respectively, led by new product approvals and launches
over the past 12 months. EBITDA increased 29% yoy to Rs2.9bn, aided by a 50bp EBITDA
margin expansion to 34.2%. PAT, at Rs2.1bn (up 23% yoy), was 8% above our forecast. Results
were strong even on an ex-NCE basis: revenues and PAT grew 28% and 22%, respectively, and
the EBITDA margin expanded 90bp to 24.5%. Management maintains FY12 revenue growth
guidance of 25% and an EBITDA margin of 22-23%. The working capital cycle improved: debtors
days dropped to 125 from 140 in FY11. Net debt marginally declined to Rs18.3bn in 1Q from
Rs19.2bn in FY11, with guidance for even lower net debt of Rs14bn-15bn by year-end, partly due
to milestone receipts.
R&D pipeline gaining traction
Glenmark’s R&D pipeline is gaining traction. It received the complete US$50m milestone
payment from Sanofi on GBR 500 (US$25m to be reflected in 2Q). GRC 15300 successfully
completed phase I, and we expect an additional milestone receipt of US$5m in 3QFY12. The
supply agreement with Salix Pharma on Crofelemer supplies has been fast-tracked. Glenmark
has already received an advance of US$15m (of a total US$21.6m), compared with an earlier
agreement for the total commitment fee to be received in five equal annual installments, with the
first payment in July 2012.
We raise our target price 7% to Rs375 and maintain Buy
We now value Glenmark’s base business at 19.3x FY12F PE (a 10% discount to its peers vs 15%
previously), which yields a value of Rs317. To this we add Rs55 for its NCE pipeline and Rs3.5
for one-off Para IV products, resulting in a 7% increase in our target price to Rs375 from Rs350.
Buy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
FY12 is off to a strong start with 1Q revenue and PAT increasing 27% and 23%, respectively, and
the core EBITDA margin expanding 90bp yoy to 24.5%. Improvement in the working capital cycle
and lower debt are other positives. The R&D pipeline is seeing good traction. We raise our TP to
Rs375. Buy.
Strong start to the year
Glenmark reported 1QFY12 revenues of Rs8.7bn (up 27% yoy as per IFRS), 6% above our
forecast, led by growth in key markets. US and India revenues (about 28% each of FY11
revenues) increased 37% and 20% yoy, respectively, led by new product approvals and launches
over the past 12 months. EBITDA increased 29% yoy to Rs2.9bn, aided by a 50bp EBITDA
margin expansion to 34.2%. PAT, at Rs2.1bn (up 23% yoy), was 8% above our forecast. Results
were strong even on an ex-NCE basis: revenues and PAT grew 28% and 22%, respectively, and
the EBITDA margin expanded 90bp to 24.5%. Management maintains FY12 revenue growth
guidance of 25% and an EBITDA margin of 22-23%. The working capital cycle improved: debtors
days dropped to 125 from 140 in FY11. Net debt marginally declined to Rs18.3bn in 1Q from
Rs19.2bn in FY11, with guidance for even lower net debt of Rs14bn-15bn by year-end, partly due
to milestone receipts.
R&D pipeline gaining traction
Glenmark’s R&D pipeline is gaining traction. It received the complete US$50m milestone
payment from Sanofi on GBR 500 (US$25m to be reflected in 2Q). GRC 15300 successfully
completed phase I, and we expect an additional milestone receipt of US$5m in 3QFY12. The
supply agreement with Salix Pharma on Crofelemer supplies has been fast-tracked. Glenmark
has already received an advance of US$15m (of a total US$21.6m), compared with an earlier
agreement for the total commitment fee to be received in five equal annual installments, with the
first payment in July 2012.
We raise our target price 7% to Rs375 and maintain Buy
We now value Glenmark’s base business at 19.3x FY12F PE (a 10% discount to its peers vs 15%
previously), which yields a value of Rs317. To this we add Rs55 for its NCE pipeline and Rs3.5
for one-off Para IV products, resulting in a 7% increase in our target price to Rs375 from Rs350.
Buy.
No comments:
Post a Comment