Emkay Global Financial Services has recommended hold rating on Glenmark Pharma with a target of Rs 400, in its August 03, 2012 research report. â??Glenmark Pharma, total revenues grew 6% in constant currency terms. However, international biz (contr. 70%) declined 2% to $140mn. India biz (contr. 30%) grew 24%. India revenues (contributed 27%) grew 24% YoY to Rs2.8bn led by market share gains in derma, respiratory and cardiac portfolio. Price led growth was 4%. US business (contr. 38%) grew 30% in $ terms and 56% YoY in INR terms due to INR dep. and market share gains for OC products. The company launched 5 new OCs this quarter taking the total number of OCs to 12. During the quarter, gross margins contracted by 670bps YoY and expanded 330bps QoQ to 65%. Adjusted EBITDA margins contracted 300bps YoY and improved 360bps QoQ to 21% led by decrease in gross margins and other expenses (up 40% YoY). Aberration in margins was due to high base effect of Gabapentin as this was in short supplies in Q1FY12. PAT adjusted for licensing income of USD25mn in Q1FY12 and forex loss of Rs550mn this quarter, grew by 8% to Rs1.2bnâ??
â??We expect base business to report 18% revenue growth in FY13E and 16% in FY14E. We expect EBIDTA margins to remain under pressure at 20% in FY13/ 14E. Earnings will grow by 12% CAGR over FY12-14E. Maintain Hold on the stock with a target of Rs400 (16x average of FY13/ FY14 EPS of Rs22.3+ NPV of Rs39). At CMP, the stock is trading at 19x FY13E and 16x FY14E earnings,â?? says Emkay Global Financial Services research report.
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