Glenmark Pharma hits 52-week low post Q4 results

The stock hit 52-week low of Rs 716, down 5.5%, extending its Friday's 16% on BSE.

Glenmark Pharmaceuticals (GNP) hit 52-week low of Rs 716, down 5.5%, extending its Friday’s 16% on BSE, after the company reported a lower than expected revenue growth in March quarter (Q4FY17).

Analysts at ICICI Securities said a poor Q4 was largely due to lower-than-expected gZetia sales and sharp price erosion in the US base business (around 15% YoY). The management has downgraded revenue guidance to 12-15% (15-20%) for FY18 owing to lower gZetia exclusivity sales and pricing pressure in the US.

Although the US portfolio looks promising with 65 pending approvals with some limited competition opportunities, the pricing pressure due to increased competition and client side consolidation looms large on US growth in the near term, the brokerage firm said in result update.

“Share price erosion in the base US generic business comes as a surprise especially as the price declines in the base business (ex-gZetia) on a sequential basis appear to be at least 10%. gZetia underperformance just adds to the woes,” analyst at Emkay Global Financial Services said in result update.

“Overall outlook remains weak for GNP as it’s unlikely that non US markets likely to make up for weak US fundamentals. GNP’s ongoing travails reflect the growth challenges that many Indian mid-sized generic companies likely to confront in the medium term,” the brokerage firm said in report, maintain ‘reduce’ rating on the stock.

“We had expected net debt reduction in FY17 on Zetia launch. A rise in net debt by Rs 450 crore in FY17 was disappointing despite 50% YoY growth in US sales. After adjusting for Venezuela write-off, net debt was up in FY17,” analyst at Elara Capital said in quarterly update.

The brokerage firm cut earnings per share (EPS) 33% in FY18E and 17% in FY19E to factor in lower US sales and downgrade the stock to Reduce from Accumulate with a new target price of Rs 770 from Rs 1,041.