Glenmark’s consolidated revenues grew by 11% yoy to Rs 1,660 crore (in line), led by LatAm (+86%) and India (+19%). US sales came in at $89m (up 5% q-o-q; in line). EU sales grew by 12% yoy while API sales declined by 7% y-o-y. RoW disappointed with a 25% decline due to weak currency.
Ebitda grew by 15% y-o-y to Rs 360 crore. Adjusted OPM grew by 300 bps q-o-q to 21.7%. R&D cost increased by 24% y-o-y to R171 crore. There was a forex gain of Rs 320 crore. The tax rate came in higher at 28%. Resultant, PAT came in at Rs 190 crore , up 3% y-o-y.
Visible pick-up in ANDA approvals in the US, combined with stabilising overheads, should help expand Glenmark’s consolidated Ebitda margins, leading to accelerated earnings growth and re-rating of the generics business. This, combined with the steady domestic formulations sales, should help mitigate near-term challenges emanating from forex volatility in EMs. Glenmark continues to be the best placed pharma company in the innovation R&D space.
With multiple data points expected from six “first in class” clinical candidates in the next 18 months, Glenmark can generate significant licensing revenues. Successful progression of even one of these can put Glenmark in a higher growth orbit in the medium term. Maintain Outperform. Glenmark is one of our top mid-cap picks.