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F r e s h m a r g i n c o n c e r n s a m i d r o b u s t g r o w t h …
Glenmark came out with a mixed set of numbers for Q3FY12. Revenues
were at | 1031.3 crore, higher than our expectation of | 906 crore, driven
by strong growth in the US and RoW markets. However, domestic
formulations grew by just 11% (our expectation 18%) on the back of
inventory rationalisation. Excluding the licensing income of ~| 24 crore,
the base business grew by 34.5% YoY to | 1007 crore. EBITDA margins
stood at a mere 10% against our expectation of 15.5% due to higher
forex loss and R&D spend. The net profit was | 46.1 crore compared to
our expectation of | 80 crore. We are revising our target price downwards
by ~12 % based on revised FY13 numbers after considering some added
cost pressure and an unforeseen inventory rationalisation exercise in
branded formulations. We, however, maintain our BUY recommendation
as the company remains in a high growth trajectory.
ƒ Domestic formulations grow by only 11.3% YoY
The domestic formulation business grew only 11% YoY to | 254.7
crore owing to inventory rationalisation. Glenmark is planning to
reduce inventory in the channels, which would improve both
inventory days and receivable days. The management has indicated
that the inventory rationalisation would continue in Q4FY12 as well.
ƒ Like to like sales in US market grow by 38% YoY
The US formulation business grew by 56.3% YoY to | 319 crore on
the back of (i) recent product launches including OCs and generic
Malarone tablets and (ii) favourable currency. Constant currency
growth during the quarter was 38% YoY. The company filed two
ANDAs with the USFDA.
V a l u a t i o n
We have revised our FY13E EPS target from | 23.3 to | 20.5 due to
margin pressure attributable to higher than estimated R&D spend and
possible consolidation of high margin domestic formulations business
owing to channel inventory rationalisation. Other growth drivers,
however, are expected to remain intact. We expect growth from other
geographies to keep up the momentum. We have assigned a target price
of | 349 (earlier | 396) based on 17x FY13E EPS of | 20.5. We maintain
BUY
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
F r e s h m a r g i n c o n c e r n s a m i d r o b u s t g r o w t h …
Glenmark came out with a mixed set of numbers for Q3FY12. Revenues
were at | 1031.3 crore, higher than our expectation of | 906 crore, driven
by strong growth in the US and RoW markets. However, domestic
formulations grew by just 11% (our expectation 18%) on the back of
inventory rationalisation. Excluding the licensing income of ~| 24 crore,
the base business grew by 34.5% YoY to | 1007 crore. EBITDA margins
stood at a mere 10% against our expectation of 15.5% due to higher
forex loss and R&D spend. The net profit was | 46.1 crore compared to
our expectation of | 80 crore. We are revising our target price downwards
by ~12 % based on revised FY13 numbers after considering some added
cost pressure and an unforeseen inventory rationalisation exercise in
branded formulations. We, however, maintain our BUY recommendation
as the company remains in a high growth trajectory.
ƒ Domestic formulations grow by only 11.3% YoY
The domestic formulation business grew only 11% YoY to | 254.7
crore owing to inventory rationalisation. Glenmark is planning to
reduce inventory in the channels, which would improve both
inventory days and receivable days. The management has indicated
that the inventory rationalisation would continue in Q4FY12 as well.
ƒ Like to like sales in US market grow by 38% YoY
The US formulation business grew by 56.3% YoY to | 319 crore on
the back of (i) recent product launches including OCs and generic
Malarone tablets and (ii) favourable currency. Constant currency
growth during the quarter was 38% YoY. The company filed two
ANDAs with the USFDA.
V a l u a t i o n
We have revised our FY13E EPS target from | 23.3 to | 20.5 due to
margin pressure attributable to higher than estimated R&D spend and
possible consolidation of high margin domestic formulations business
owing to channel inventory rationalisation. Other growth drivers,
however, are expected to remain intact. We expect growth from other
geographies to keep up the momentum. We have assigned a target price
of | 349 (earlier | 396) based on 17x FY13E EPS of | 20.5. We maintain
BUY
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