Glenmark Pharmaceuticals - Steady growth recovery

Q3FY10 results review - ICICI Securities

Glenmark's Q3FY10 recurring consolidated net profit rose 32% YoY to Rs1.07bn vis-à-vis our estimate of Rs1.12bn. Excluding the US$5mn of R&D income from Medicis Pharmaceutical Corp (Medicis), base business net profit rose 5%YoY to Rs855mn. Product revenues were up 6 YoY to Rs6.2bn, driven by surge of 17% YoY in domestic dosage-form and 80% YoY in API. Based on YTD performance, we expect Glenmark to see FY10E base business PAT at the lower-end of Rs3-4bn (I-Sec: Rs3.57bn), guidance earlier given by the management. Management had earlier guided for 25% YoY FY11E revenue growth (I-Sec: 21%). On the R&D licensing front, Glenmark is working towards closing a deal, which may not happen in FY10. Key stock catalysts for the next year are: i) improving base business performance ii) likely approval of niche ANDAs iii) 1-2 R&D licensing deals and iv) IPO of its 100%-owned, Glenmark Genercis (GGL), at equity value of ~Rs50bn. Reiterate BUY.

Source : Equity Bulls

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