Motilal Oswal has given Neutral recommendation for Glenmark Pharma with a target price of Rs. 600 in its research report issued on Aug 16, 2021

Motilal Oswal’s research report on Glenmark Pharma

Glenmark Pharma (GNP) delivered in-line 1QFY22 earnings, led by strong growth in Domestic Formulations (DF) and ROW sales. GNP witnessed benefit from Fabiflu sales due to COVID, in addition to an improvement in core therapies in the DF segment. GNP is on track for its plan to reduce net debt by INR16b using proceeds from the IPO (~INR12b) and internal accruals (~INR4b). We raise our EPS estimate for FY22/FY23 by 3%/2%, factoring in a) the outperformance of DF, b) better traction in the US, c) niche launches and market expansion in Europe, and d) a reduction in financial leverage. We continue to value GNP at 14x 12M forward earnings to arrive at Target Price of INR600. We maintain Neutral as the current valuation adequately factors in a potential upside in earnings over the next two years.

Outlook

We value GNP at 14x 12M forward earnings to arrive at TP of INR600. We maintain Neutral on a limited upside from current levels.

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