Ashish Dhawan Portfolio Pharma Stock Gets Buy Call For Rs 1,266 TP; Do You Own?

Global pharmaceutical firm Glenmark Pharmaceuticals Limited is driven by research and development and competes in the branded, generic, and over-the-counter (OTC) markets. Its primary focus is on respiratory, dermatological, and oncology treatments. The corporation operates in more than 80 countries and has four R&D centres in addition to 10 top-notch production sites dispersed over five continents. Following a buy call by brokerage company KRChoksey Research with a target price of Rs 1,266 on Friday, the shares of Glenmark Pharmaceuticals wrapped up 0.85% higher at Rs 1051.55 after reaching a record high of Rs 1,068 each.

Glenmark Pharmaceuticals Debt

"Nirma Limited has completed the purchase of 91,895,379 equity shares, constituting 75.0% of Glenmark Life Sciences Limited's issued and paid-up equity share capital, from Glenmark Pharma, as per the terms of the share purchase agreement dated September 21, 2023. This transaction was finalized at a rate of INR 615/- per share, amounting to a total consideration of INR 56,515 Mn, and was concluded by March 12, 2024. Glenmark Pharma will continue to own 7.84% in Glenmark Life Sciences though. This deal will help Glenmark Pharma to become brand led organization, with continuous focus on the core therapeutic areas of dermatology, respiratory and oncology. Glenmark Pharma will continue to focus on consistent growth across its key markets and net cash positive balance sheet, ultimately creating value for its shareholders. The total debt of INR 49,530 Mn will be repaid in FY25E, as a consequence of the deal. This will save significant interest cost and boost earnings, going forward," said the brokerage firm KRChoksey Research.

Glenmark Pharmaceuticals Growth Expectations

"In addition to the above development, Glenmark Pharma has showed higher than market growth for the month of January 2024 and February 2024 for India Pharma market (IPM) as per All Indian Origin Chemists and Distributors Ltd. (AIOCD) Feb 2024 report. While the IPM growth was 9.5% YoY for the month of January 2024, Glenmark Pharma clocked 20.2% YoY growth, for the same period. Moreover, in February 2024, the Company has reported 11.3% YoY growth vs IPM growth of 9.0%, for the same period. The Company did changes in the distribution model involving stock point consolidation and channel inventory rationalization in domestic business. This is expected to improve operating margins, and working capital going forward," the brokerage further added.

Glenmark Pharmaceuticals Share Price Target

"In light of these events, we enhance Glenmark Pharma's sales and earnings estimates to 11.2% and 44.2% CAGR, respectively, over FY23-FY26E (vs previous estimates of 9.2% and 32.5% CAGR growth respectively) Debt reduction post completion of sale of Glenmark Lifesciences to Nirma in March 24 and strong out-performance it has been able to exhibit in India market in Q4FY24E (Jan-24 and Feb24) should propel higher sales and earnings growth for the company. Consequently, we raise the Target price on Glenmark Pharma to INR 1,266/share (vs previous: INR 984) while maintaining valuation multiple at 20.0x, on revised FY26E EPS of INR 63.3 (earlier: INR 49.2). Accordingly, we upgrade our rating on Glenmark Pharma from ACCUMULATE to BUY as the target price implies 24.5% upside from its CMP," KRChoksey Research said in a note.

Ashish Dhawan Stake In Glenmark Pharmaceuticals

As per the shareholding pattern of Glenmark Pharmaceuticals available on BSE for the quarter ended December 2023/Q3FY24 ace investor Ashish Dhawan held 72,00,000 shares of the company in his portfolio which is 2.55% of the total paid-up share capital of Glenmark Pharmaceuticals.

Disclaimer

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