Glenmark stock has turned attractive on a relative basis following the recent stock correction the stock trades at the lower end of the sector valuation (15.3X FY2015 EPS versus 18-22X for large-cap. generics). The company is also less impacted by the drug-pricing policy in India. Glenmarks strong US performance over the past two years has been driven by the launch of niche products dermatology and oral contraceptives. Structurally, we expect the OC segment to remain competitive (with the entry of Lupin/Mylan) while dermatology launches may hold the key to sustainable growth in the US.
Glenmark has $490 million in US Dollar-denominated loans, which will lead to higher reported net debt numbers (in rupee terms) in the near term.