Shares of Glenmark Pharma fell 5 per cent in Friday’s trade following the drug maker’s Investor Day 2022. Motilal Oswal, which attended Investor Day to understand the management strategies across major business segments, said the drug maker aims to boost RoCE (EBIT/capital employed) to 22 per cent by FY27 from 17 per cent in FY22, with an increased share of the branded generics business, controlled R&D spends towards the NCE portfolio, and sustained improvement in operating leverage.
Motilal Oswal said the company also aims to have zero net debt by FY26.
The stock fell 4.8 per cent to hit a low of Rs 408.80 on BSE. Motilal values the stock at 10 times 12-month forward earnings to arrive at a target of Rs 420.
“We remain Neutral on the stock, given its 5 per cent earnings CAGR over FY18-22. We expect earnings CAGR to be moderate over FY22-24 (9 per cent). The benefit from complex product filings is expected from FY25,subject to timely approval. Asset utilization at Monroe for the US market is also subject to successful resolution of regulatory issues,” Motilal said.
The drug maker recently reported a marginal rise in net profit at Rs 279 crore for the September quarter compared with Rs 275 crore in the year-ago quarter. Consolidated revenue rose to Rs 3,375 crore in the period under review compared with Rs 3,147 crore in the year-ago quarter.
In a November 16 note, Shares and Securities expects Glenmark’s revenue to grow at 4.8 per cent, Ebitda 6.6 per cent and adjusted PAT at 3.4 per cent compounded annually over FY22-FY24E, respectively.
“Since our last update on August 22, Glenmark’s stock price has increased 11.9 per cent. We apply a multiple of 10.5 times (earlier 9.5 times) on FY24E EPS of Rs 45.60 (earlier Rs 45.50) and increase our target to Rs 479 per share (earlier Rs 433 per share),” it said.
Elara Securities said India business is reviving post the tapering of Covid sales and Glenmark getting back on the growth track.
The US business has improved sequentially but challenges to scale up remain and management has set a target of flat sales. Ebitda margin for FY23 may remain under pressure despite lower share of Covid products and the launch of Ryaltris in the US. “We reiterate Accumulate with a higher target of Rs 470 from Rs 435 based on 10x (unchanged) FY24E P/E,” Elara said.
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