Sharekhan recommended hold rating on Glenmark Pharmaceuticals with a target price of Rs 730 in its research report dated November 03, 2017.
Sharekhan's research report on Glenmark Pharmaceuticals
Glenmark Pharmaceuticals (Glenmark Pharma) revenue grew 1.5% y-o-y to Rs. 2,256.6 crore for Q2FY18, while operating profit declined by 13.5% to Rs. 388.4 crore. Adjusted profit declined 4.2% to Rs. 214.2 crore. The weak performance was on account of a 5.7% decline in US business and a 21.7% drop in Latin America (LatAm) business. The US business is witnessing pricing pressure to the tune of 13% (versus 10-12% earlier). Moreover, raw material cost increased 22.2%, while staff cost rose 15.5% (owing to increments and bonuses given to employees), leading to a sharp fall in operating profit. However, a lower tax rate of 21.6% (versus 29.1% y-o-y) restricted the decline in adjusted profit to 4.2%.
Outlook
Taking into account the management’s cautious outlook, post a weak quarterly performance, we reduce our sales and earnings estimates by 4% /4% and 21.8%/15% for FY2018/ FY2019, respectively. We maintain our Hold rating and revise our PT downward to Rs. 730, valuing the stock at 15x FY2019 earnings.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More
