Recommendation Review: Glenmark Pharmaceuticals

We had recommended Glenmark Pharma to our readers in DSIJ Vol. 27, Issue # 26 (dated December 16, 2012), when it was trading at a price of Rs 437. Our recommendation was based on the fact it is a consistent performer in the pharma sector and is also witnessing strong growth in its domestic as well as international business. Its strong pipeline of innovative products and the focus on low competition niche products are the main factors that we took into consideration.

The strongest positive for the company is its strong product pipeline. Glenmark has four product approvals in Russia in the dermatology segment. In USA, it has 10 approvals for oral contraceptives (OCs) and 19 approvals for dermatology products. It has already monetised some OCs this year, which are yielding higher revenues. Glenmark has also a presence in Japan, which is the world’s second largest pharma market, and this will benefit the company in the future.

Post our recommendation, the company came out with its Q3 and Q4 financial results, which were fantastic. For Q4, it has reported a 25 per cent increase in its topline to Rs 1335 crore. Its net profit also rose by 11 per cent to touch Rs 166.7 crore. The balance sheet is also in healthy shape, with the debt-to-equity ratio below 1x. We believe that investors should take their money off the table following the fantastic performance of the company. This would give them a 25 per cent return on their investment.