 "Glenmark Pharma's growth outlook is improving")
In a quarter when most Indian companies faced challenges in the domestic business with majority of the larger players underperforming, Glenmark's 10.4 per cent growth was way higher than average industry growth of five-six per cent. Domestic market contributed a fourth to Glenmark's revenues. The company’s US business also grew by an impressive 24.4 per cent and looking at the good pipeline for US and expected launch of products in current financial year, the momentum is likely to continue. The US contributes a third to the company’s overall revenues.
The company’s US growth in the June 2016 quarter was aided by new products launches as well as price hikes and market share gains in dermatology drug, Mupirocin generics. The second quarter is likely to be stronger as analysts at Axis Capital say the company has attained good market share in cholesterol drug Crestor generics, despite 90-95 per cent price erosion.
The company’s US growth in the June 2016 quarter was aided by new products launches as well as price hikes and market share gains in dermatology drug, Mupirocin generics. The second quarter is likely to be stronger as analysts at Axis Capital say the company has attained good market share in cholesterol drug Crestor generics, despite 90-95 per cent price erosion.
In the near-term, all eyes will be on the launch of generics of Zetia, another cholesterol-lowering drug. The launch is slated for December, and can accrue $150 million to sales during exclusivity period. The domestic growth remains strong, but Glenmark may face challenges in Latin America due to cross-currency headwinds and Venezuela supplies getting stalled, say analysts. However, Latin America is comparatively a small market contributing only eight per cent to overall revenues.
Also, other smaller contributors such as Asia, Africa and Commonwealth of Independent States contributing about 10th and Europe contributing eight per cent have grown 23.3 and 24.4 per cent, respectively, during June quarter, and the outlook remains healthy.
Overall, considering a scale-up in the US business with key product launches, outperformance in domestic branded formulations and improving growth momentum in emerging market formulations, analysts at ICICI Securities say they expect an earnings per share compounded annual growth rate of 24.9 per cent over FY16-FY19. The June 2016 quarter saw sales grow 17.9 per cent, while net profit at Rs 226.8 crore grew 27.2 per cent, compared to the year-ago period.
Looking at growth in major markets, Glenmark's growth story remains attractive and thus, most analysts remain positive on the company.
ICICI Securities has a target price of Rs 966, while Religare Institutional Research's is at Rs 1,060. While these suggest a potential upside of 14 per cent from the current levels, for further upgrades, analysts are awaiting improvement in the company's free cash flows (surplus cash post capex).
Analysts at IDFC Securities say while Glenmark’s earnings growth story is compelling, its ability to generate free cash from FY17 onwards and reduce its debt is the key monitorable going forward. IDFC has a target price of Rs 993 for stock trading at Rs 853 levels.
Also, other smaller contributors such as Asia, Africa and Commonwealth of Independent States contributing about 10th and Europe contributing eight per cent have grown 23.3 and 24.4 per cent, respectively, during June quarter, and the outlook remains healthy.
Overall, considering a scale-up in the US business with key product launches, outperformance in domestic branded formulations and improving growth momentum in emerging market formulations, analysts at ICICI Securities say they expect an earnings per share compounded annual growth rate of 24.9 per cent over FY16-FY19. The June 2016 quarter saw sales grow 17.9 per cent, while net profit at Rs 226.8 crore grew 27.2 per cent, compared to the year-ago period.
Looking at growth in major markets, Glenmark's growth story remains attractive and thus, most analysts remain positive on the company.
ICICI Securities has a target price of Rs 966, while Religare Institutional Research's is at Rs 1,060. While these suggest a potential upside of 14 per cent from the current levels, for further upgrades, analysts are awaiting improvement in the company's free cash flows (surplus cash post capex).
Analysts at IDFC Securities say while Glenmark’s earnings growth story is compelling, its ability to generate free cash from FY17 onwards and reduce its debt is the key monitorable going forward. IDFC has a target price of Rs 993 for stock trading at Rs 853 levels.