Glenmark soars over 21% on CLSA’s upgrade
The stock has fallen over 42 per cent in the last one year.
The stock surged 21.35 per cent to end at Rs 365.50. The stock has fallen over 42 per cent in the last one year.
“Glenmark’s 2QFY20 (second quarter) results were ahead of our estimates with profit boosted by Rs 800m (million) in FX (foreign exchange) gains. All geographies witnessed YoY (year-on-year) growth for the first time in over three years.US sales momentum is expected to remain strong whereas India should continue growing above the industry rate,” said CLSA.
The company on Thursday reported a consolidated net profit to Rs 255.5 crore for the second quarter ended September. The company had posted a net profit of Rs 414 crore in the July-September quarter a year ago. The net profit is not comparable to the previous corresponding quarter on account of an exceptional income of Rs 167.2 crore recorded in the second quarter of the previous financial year.
CLSA said there was no reduction in net debt of Glenmark Pharmaceuticals in the first half of FY20 and high development in research and development in the medium term is unlikely to bring the debt down significantly. The company's net debt increased by Rs 130 crore in the first half of the ongoing financial year to Rs 3,670 crore.
However, even as a leveraged balance sheet remains a concern, valuation at11times FY21earnings per share is attractive, the brokerage said. “High leverage and weak FCF (free cash flow) generation does remain a concern, particularly if Glenmark is unable to raise funds in the innovative research company Ichnos Sciences in early 1HCY20 (April-October)...While we remain concerned about Glenmark’s weak balance sheet, we believe its valuation attractive,” the brokerage said.