Glenmark: Q1FY14 Net Up 64%

Pharma major Glenmark has reported 64% growth in its net profit to Rs 128.68 crore. Its sales grew by 19% to Rs 1238 crore for the quarter. The EBITDA margins also improved by 415 basis points.

The company has reported 17% growth in the domestic formulations business for the quarter to touch Rs 328 crore. Its US revenues rose by 14% to Rs 446 crore. The consolidated revenues in Europe rose by 21%, but the growth was mainly in finished dosages. The formulations business revenues in Europe remained flat. The revenues in Latin America and Caribbean grew by 31%, while those in Africa rose by 25%. The API business revenues grew by 26%.

Glenmark’s EBITDA margins mainly expanded on the back of a decline in material costs as a percentage of sales. Its total expenses as percentage of sales were at 82.83% against 86.80% a year ago.

Interest costs during the quarter rose by 22% to Rs 46 crore. The interest cover ratio is also healthy at 4.66x. The effective tax rate is at 23%, in line with that in Q1FY13.

During the quarter Glenmark, was granted 4 ANDA approvals and filed 3 ANDAs with the US FDA. It has 53 products pending approval with the US FDA, of which 26 are Para IV (limited competition) products. The company now has 87 generic products authorised for distribution in the US market. This indicates that the company has a good pipeline of products for future growth.

At its CMP of Rs 572, the stock is trading at a TTM price-to-earnings multiple of 23x. We believe that it may see a price of Rs 650 within a year, yielding returns of 14% on the CMP for investors.