Buy Glenmark Pharma; target of Rs 400: Firstcall Research

“Glenmark Pharmaceuticals, together with its subsidiaries, engages in the manufacture and marketing of pharmaceutical formulations and active pharmaceutical ingredients in India and internationally. The company has a significant presence in branded generics markets across emerging economies including India. Its subsidiary, Glenmark Generics Limited has a fast growing and robust US generics business. The company’s net sales and net profit are expected to grow at a CAGR of 15% and 44% over FY09 to FY12E. It is the most successful Indian company in novel drug discovery research and has earned USD 137 million. The company out-licensed GRC 15300 to Sanofi-Aventis with a total deal value of USD 325 million. Glenmark received USD 20 million as upfront payment.”

“For the Second quarter, the top line of the company increased 23%YoY and stood at Rs 7413.83 million against Rs 6025.01 million of the same period of the last year. The bottom line of the company for the quarter stood at Rs 1116.25 million from Rs 808.65 million of the corresponding period of the previous year i.e. an increase of 38%YoY.”

“At the market price of Rs 356.05, the stock is trading at 18.94 x and 16.49 x for FY11E and FY12E respectively. On the basis of EV/EBDITA, the stock trades at 11.26 x for FY11E and 10.09 x for FY12E. Price to book value of the company is expected to be at 3.36 x for FY11E and 2.79 x for FY12E respectively. EPS of the company is expected to be at Rs 18.80 and Rs 21.59 for the earnings of FY11E and FY12E respectively. The company’s net sales and net profit are expected to grow at a CAGR of 15% and 44% over FY09 to FY12E. We recommend ‘BUY’ in this particular scrip with a target price of Rs 400 for medium to long term investment,” says Firstcall Research Report.