Brokerage house Prabhudas Lilladher is bullish on Glenmark Pharma and has recommended buy rating on the stock with a target price of Rs 1186 in its research report dated April 01, 2015.
Prabhudas Lilladher's report on Glenmark Pharma
"Glenmark has seen a steady performance over the last few years and we expect them to be in a favourable position going forward to gain from a large number of approvals in the USA and the US sales is expected to grow at a CAGR of 33% for the next three years. With US accounting for 34% of the existing turnover, GNP we believe GNP is in a sweet spot. With 64% revenues from US, EU and ROW, Glenmark is in a favourable position to gain from (a) strong flow of approvals in US, (b) turnaround in key ROW markets with launch of high‐end drugs and (c) expansion of operating margin in non‐US exports. Besides, we expect value unlocking of NCE/biologics, along with consistent growth of 16‐18% in domestic formulation to turn out to be the inflection point for the company. The company is set to receive approvals in 25‐30 generics in US along with sole exclusivity in Zetia in 12‐24 months. Launch of Seretide generics and Oncology drugs in key markets such as Brazil, Mexico and Russia will expand operating margin of ROW sales."
"With strong potential in US generics, India formulations and branded generics in ROW markets, we expect a CAGR of 36% in revenues in FY14‐17E on rapid progress in sales and profitability. Key headline margins will be benefitted by 180‐200bps in FY15E‐17E on company's progression in high‐end products in the value chain. With better clarity on US generic potential and Seretide generic approvals in ROW markets, we increase our core earnings estimates by 12% and 35% for FY16E and FY17E, respectively. Our core EPS estimates are Rs25.2, Rs42, and Rs58.5 in FY15E, FY16E and FY17E, respectively. We upgrade our recommendation to 'BUY' and increase TP to Rs1,186, which implies potential upside of 50% at the current valuation", says Prabhudas Lilladher's research report.
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