Target: ₹460
CMP: ₹428.50
Glenmark Pharmaceutical’s Q3 EBITDA of ₹620 crore (flat q-o-q) was largely in line with our estimates, aided by higher revenues in rest of the world (31 per cent y-o-y growth) and EU markets (30 per cent y-o-y growth). There has been delay in monetisation of Ichnos stake sale.
There was forex gain to tune of ₹47.60 crore booked in other income. There was exceptional gain to the tune of ₹33.90 crore, aided by divestment of Razel brand net off inventory write-off and remediation cost related to Monroe facility (₹130 crore).
Despite stake sale in Glenmark Lifescience and certain brand divestments in domestic formulation, debt continues to remain at elevated levels. 9MFY23 performance was muted, adjusted for milestone income from Ryaltris.
We have factored in 8 per cent EBITDA CAGR over FY23-25E. At CMP, the stock is trading at 13x FY24E P/E. We maintain our ‘Accumulate’ rating with unchanged target price of ₹460/share, valuing at 13xSept 2024E P/E. Any potential stake sale in Ichnos and meaningful debt reduction will be key catalyst for stock to re-rate.