The share price of Glenmark Pharmaceuticals fell by more than 16% on Friday, after the pharma major failed to meet the expected profit and revenue estimates for the quarter ended March 2017 on account of lower US sales. This is the biggest fall in the stock after January 28, 2009.
The profit for the three months to March was less than half of the Bloomberg consensus estimate. Glenmark posted a profit of Rs 183.76 crore for the quarter against the Bloomberg consensus estimate of Rs 581 crore. The net revenue for the company also missed analyst forecasts by nearly 18%.
The analysts had estimated a net revenue of Rs 2,942 crore for the quarter. The company’s gross debt at the end of March 2017 stood at Rs 4,723 crore, an increase of Rs 735 crore over that in FY16.
The less-than-expected sales of Zetia generic also weighed on the company’s results. Chaturya Aggarwal, analyst at IDBI Capital, said Zetia sales, which were expected to be exponentially higher, did not turn out as planned. The company launched Zetia on December 12, 2016, in a partnership with US-based Par Pharmaceuticals.
Aggarwal further said that debt was a big concern in Glenmark Pharma. “The management said they will use the excess cash they get from Zetia to reduce their debt. Their Latin American business is not growing. It was down about 44% this year. They have done a write off about Rs 350 crore on account of Venezuela, cash has been reduced on that account. That is the reason they could not reduce the net debt position in the books,” Aggarwal added.
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The stock is trading at a price to earnings (PE) of 23.39. “It is better to stay away from Glenmark at this point,” Aggarwal said.