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Glenmark Pharma: Target Raised Despite Q4 Dip
3 Feb
Summary
- Glenmark's revenue grew 15.1% year-on-year but fell quarterly.
- EBITDA margin expanded year-on-year but contracted quarter-on-quarter.
- Analysts maintain a positive outlook for Glenmark Pharmaceuticals.
Glenmark Pharmaceuticals announced a 15.1% year-on-year revenue growth, reaching ₹3,900.60 crore, though this represented a 35.5% decrease from the previous quarter. EBITDA saw a 44.9% y-o-y increase to ₹869.70 crore, with a 458 basis points y-o-y margin expansion to 22.3%. However, quarter-on-quarter figures showed a 63.1% decline in EBITDA and a 1,672 bps contraction in margin.
Despite these quarterly variances, a positive outlook is maintained due to Glenmark's robust product pipeline and sustained launch momentum in markets like India and North America. Significant EBITDA margin expansion to around 23% is projected for FY26E, primarily due to reduced R&D expenses following the AbbVie deal. Further margin improvements are expected from FY28E onward as new launches from the Monroe facility start contributing to operating leverage.
Adjusted earnings per share (EPS) estimates for FY26E and FY27E have been marginally revised downwards by 2.9% and 2.4%, respectively, to account for a higher effective tax rate. The stock is valued at 25x FY27-28E EPS, leading to a revised target price of ₹2,175. A Price/Earnings to Growth (PEG) ratio of 0.6x further supports this valuation, reinforcing an 'Add' stance.
