MOSL: GLENMARK PHARMA (Neutral)-Traction improves in US/LATAM segment
GLENMARK PHARMA: Traction improves in US/LATAM segment
(GNP IN, Mkt Cap USD1.2b, CMP INR301, TP INR325, 8% Upside, Neutral)
- India/RoW drive revenue growth: Sales were up 9% YoY to INR27.6b (our estimate: INR25.2b) in 2QFY20. Growth was primarily driven by India business (+15.2% YoY to INR9b; 32% of sales), RoW (+14.3% YoY to INR3.5b; 13% of sales) and LATAM (+23.1% YoY to INR1.2b; 4% of sales). Europe (+9.3% YoY to INR2.8b; 10% of sales) and API (+7.4% YoY to INR2.7b; 10% of sales) also contributed to the momentum. The US (31% of sales) exhibited moderate growth of 4.6% YoY to INR8.5b due to continued price erosion.
- Mix change/bonus incentives impact profitability: Gross margin (GM) shrank 100bp YoY to 64.3% due to the change in the product mix. EBITDA margin contracted at a higher rate of 130bp YoY to 14.4% (our estimate: 14.7%) due to a lower GM and higher staff cost (+90bp YoY), partly offset by lower other expenses (-70bp YoY). EBITDA was flat YoY at INR4b (our estimate: INR3.7b). Adjusting for forex gain (INR780m), PAT was up 7% YoY at INR2b (our estimate: INR1.7b) led by a lower tax rate.
- Concall highlights: (1) Strong traction in Remogliflozin for GNP in India. The company is also targeting various line extensions over next one year. (2) GNP expects a sustainable US quarterly sales run-rate on the back of new launches and limited erosion in Mupirocin cream. (3) GNP guided for 10-15% YoY growth in ROW markets on an annualized basis. The company expects much better growth in FY21, led by addition of products and tender business. (4) Monroe facility would be commercialized from FY21. (5) R&D spend is expected to be flat on a YoY basis for FY20.
Glenmark Pharmaceuticals is engaged in the discovery of new molecules, both NCEs (new chemical entity) and NBEs (new biological entity), with seven molecules in various stages of clinical development & pre-clinical development. Co.'s Drug Discovery business primarily focuses in the areas of inflammation, metabolic disorders and pain. Co.'s Formulations business focuses on therapeutic areas such as dermatology, anti-infectives, respiratory, cardiac, diabetes, gynecology, CNS, and oncology. Co.'s Glenmark Generics Ltd. business focuses on developing, manufacturing, selling and the distribution of generics through wholesalers, retailers and pharmacy chains.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.