Glenmark Pharma

7/24/2019 Glenmark Pharma

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Jan 02, 2016Glenmark Pharmaceuticals Ltd

Company BackgroundGlenmark Pharmaceuticals Ltd listed on the stock exchangesince 2000, operates in formulations space with exposurein USA, India, AACIS (Africa, Asia and CommonwealthIndependent States), LATAM (Latin America) and Europeregions. The company also markets APIs to regulated andsemi-regulated markets. The therapies Glenmark focuses onare dermatology, anti-infectives, respiratory, cardiac, diabetes,gynaecology, CNS and oncology. Glenmark has been active innovel molecule development segment for NBE (New BiologicalEntities) and NCE (New Chemical Entities), of which 7 areunder active development. The formulations business has sixmanufacturing facilities, four in India and two overseas; andthe facility at Baddi, Himachal Pradesh, India is approved byMedicines and Healthcare Products Regulatory (MHRA) andUnited States Food and Drug Administration (USFDA) for

semi-solids. The overseas facilities are situated in Brazil andthe Czech Republic. The API operations are from 4 facilitiesacross India and six R&D centers.

Exhibit 2: Shareholding Pattern (%)

Source: BSE, Karvy Research

Exhibit 3: Revenue Segments (%)

Source: Company, Karvy Research

Promoters46.5%

FIIs36.8%

DIIs6.0%

Others10.7%

Balance sheet (Rs. Mn)

FY15 FY16E FY17E FY18E

Total Assets 96875 106392 116298 132400

Net Fixed assets 33284 37159 39737 44011

Current assets 53233 58874 66198 78026

Other assets 10358 10360 10362 10364

Total Liabilities 96875 106392 116298 132400

Networth 30001 48657 60048 73213

Debt 37999 34300 29691 29532

Current Liabilities 28874 23435 26558 29656

Balance Sheet Ratios

RoE (%) 15.9 25.0 22.2 20.8

RoCE (%) 17.6 26.8 26.9 27.2

Net Debt/Equity 1.3 0.7 0.5 0.4

Equity/Total Assets 0.3 0.5 0.5 0.6

P/BV (x) 7.1 5.4 4.3 3.6Source: Company, Karvy Research

Cash Flow (Rs. Mn)


PBT 5943 12124 15129 17245

Depreciation 2600 2754 3135 3392

Interest (net) 1887 2123 1859 1654

Tax (3178) (2292) (3058) (3400)

Changes in WC (2673) (12205) (3496) (4957)

Others 238 59 95 102

CF from Operations 4817 2563 13664 14035

Capex (5443) (6628) (5713) (7665)

Investment 42 (3) (3) (3)

CF from Investing (5400) (6631) (5717) (7668)

Change in Equity 11325 9504 0 0

Change in Debt (8698) (5822) (6468) (1813)

Dividends (635) (680) (680) (680)

CF from Financing 1992 3002 (7148) (2493)

Change in Cash (311) (1067) 799 3874


Company Financial Snapshot (Y/E Mar)

Prot & Loss (Rs. Mn)


Net sales 66298 75821 87140 99220

Optg. Exp 56072 58994 67220 77180

EBITDA 10225 16827 19920 22040

Depreciation 2600 2754 3135 3392

Interest 1887 2073 1807 1608

Other Income 205 123 151 205

PBT 5943 12124 15129 17245

Tax 1190 2292 3058 3400

Adj. PAT 4753 9831 12071 13844

Prot & Loss Ratios

EBITDA margin (%) 15.5 22.2 22.9 22.2

Net margin (%) 7.2 13.0 13.9 14.0

P/E (x) 44.7 26.5 21.6 18.8EV/EBITDA (x) 23.8 17.1 14.2 12.7

Dividend yield (%) 0.3 0.2 0.2 0.2Source: Company, Karvy Research

IndiaFormulations

26.4%

USAFormulations

30.8%

AACIS12.3%

EuropeFormulations

9.7%

Latin America& Carribean

11.5%

API9.2%
http://www.karvy.com/


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USA to recover with new approvals:Glenmark USA has had a slower growth as a predominantly generic-generic company facing increasing competition and hencede ation on one side and slowdown in USFDA ANDA (Abbreviated New Drug Applications) approvals. Compared to 18 in FY11,the company had 6 approvals in FY15. The existing basket of products is also facing higher customer bargaining power in theform of channel consolidation amongst the large purchasers and the revenue growth slowed signi cantly. The GDUFA (GenericDrug User Fee Amendments) of 2012 was introduced to quicken the average approval time but has had limited success so far.

The company has had 8 approvals in H1-FY16 indicating improvement in situation.Glenmark has 64 lings pending in various stages; of which 27 are para IV lings leaving 37 clear approvals pending. As theapproval pace picks up, Glenmark can substantially improve its basket of 102 products with new additions. The company is alsofocussing on complex injectables and Oncology products in its future lings which should contribute to higher realizations andmargins replacing highly de ated products.

Exclusive launches have had an incremental a ect on Glenmark US revenues. Starting from a quarterly run rate ofUS$ 40 Mn per quarter in Q1FY11, it had reached US$ 80 Mn per quarter in Q2FY13 as it had 2 exclusive launches and 35product approvals in the period. It had been range bound at US$ 80-90 Mn in the period, thereafter as it had just 15 approvals and2 exclusive launches. Glenmark has had 6 approvals in Q1FY16, large scope products of gVoriconazole in Q2FY16 and gZyvoxin Q3FY16. Glenmark sued for 180 day exclusive launch of gZetia with nancing from Par Pharmaceuticals and has secured thesame with expected launch in Dec-16. We expect strong growth in US formulations on account of the above known opportunities.

The company has gAlimta, gAzeliac acid (lost recently) in litigation process for an exclusive launch and gWelchol launch hasbeen delayed even for the exclusivity holder. Any positive outcome from these products could act as a positive surprise over andabove the projected growth in US revenues.

India-Maintaining above industry growth:The company has a strong presence in derma, cardiac and respiratory segments which have helped the company post higherthan industry growth in the last ve years. The growth also has been aided signi cantly by new product addition in the regionwhich is also higher than the industry average indicating that the company can further consolidate its position in the Indianindustry. The company launched Sitagliptin but had to stop after loss in litigation, which it has replaced with Tenaligliptin whichis also a similar Dipeptidyl Peptidase-4 (DPP-4) inhibitor for anti-diabetic and can plug the hole to an extent. The company haspresence in complex injectables and oncology in other geograhies which provides other untapped therapeutics for the companyin India.

Exhibit 4: US Formulations Dependent on Filings and Approvals


Exhibit 5: Therapies in FY15 (%)

Source: All India Origin Chemists and Distributors Limited (AIOCD), Karvy Research

Exhibit 6: Glenmark Market Share (%)


0%

3%

6%

9%

12%

FY14 FY15 FY16E FY17E FY18EDerma Cardiac Respiratory

Anti-infec tives Anti diabetic Other

0

20

40

60

80

100

0

2

4

6

8

10

12

Q 1 F Y 1 1

Q 2 F Y 1 1

Q 3 F Y 1 1

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Q 2 F Y 1 2

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Q 4 F Y 1 2

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Q 2 F Y 1 3

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Q 1 F Y 1 5

Q 2 F Y 1 5

Q 3 F Y 1 5

Q 4 F Y 1 5

Q 1 F Y 1 6

Q 2 F Y 1 6

Final Approved (x) Filed (x) Revenue (US$ Mn) (RHS)

Derma 28%

Cardiac 23%Respiratory

16%

Anti-infectives

14%

Anti diabetic8%

Other11%


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Exhibit 7: FY15 Growth (%)


Exhibit 8: Annual Growth (%)

Source: All India Origin Chemists and Distributors Limited (AIOCD), Company, Karvy Research

6.33.7 2.9

12.9

9.9

3.9 3.6

17.4

0

5

10

15

20

Volume Price New Product Total

Industry Glenmark Pharmaceuticals Ltd.

24%22%

18% 17% 18%

15% 15%10% 10%

13%

0%

5%

10%

15%

20%

25%

30%

FY11 FY12 FY13 FY14 FY15Glenmark Pharmaceut icals Ltd. Indus try

Developing a Novel portfolio:The company has been developing a novel portfolio which currently consists of MABs (Monoclonal Anti Bodies) and NCEs(New Chemical Entities). The portfolio is mostly rst-in-class and has stayed away from biosimilars in the biologics space. Theportfolio is a mixture of out-licensed, in-licensed and open projects. The highly experimental nature of the portfolio leads to aquick turnover of projects and Glenmark has been able to replace and secure such turnover at an impressive rate ensuring peakutilization of its R&D center at Switzerland and other places.

Exhibit 9:

Class Molecule Therapy Partnership Status

MAB GBR 1302

HER2xCD3 bispeci c antibodyfor Breast Cancer in cases withoutoverexpressive HER2, a di erentiatingfactor compared to existing.

Developed on and rst moleculefrom proprietary BEAT (Bispeci cEngagement of Antibodies) platform.Started in Q2FY15.

Demonstrated superiority inPreclinical submitted to initiatePhase I in Germany.

MAB Vatelizumab(GBR 500)

Antagonist of the VLA-2 integrinfor Relapsing Remitting MultipleScelerosis. First in Class.

Outlicensed to Sano in 2011 whichhas decided not to pursue the same as

it did not meet the primary end pointin Q2FY16. Glenmark will continue tolook for partners to outlicense oncereturned from Sano .

In Ph IIa/IIb recruting patients inUSA, Canada, Poland and Russia.Est 168 patients completion dateof May 2016. Failed to meetprimary end point.

NCE GRC 17536TRPA1 (Transient Receptor PotentialAnkyrin 1) antagonist for painfuldiabetic neuropathy. First in class.

Open

Shown positive data in a Ph IIaPoC study conducted on 138patients in Europe and India.Regulatory submissions forPhase IIb dose range ndingstudy in US, EU and India areunderway.

MAB GBR 900Chronic Pain targeting TrkA rst to be

in the clinical phase.

First in class MAB. Inlicensed from

Layline Genomics Italy. Ongoing fromFY11. Phase I in UK ongoing.

NCE GRC 27864

Pain management targetingmPGES-1 (Microsomal ProstaglandinE synthase-1) inhibitors such asosteoporosis and rheumatoid arthritis.

Option agreement with Forest labsstarted in Q3FY13 and receivedUS$ 15 Mn so far.

Phase I single ascending andmultiple ascending dose nearingcompleted with no safetyconcerns. Pre-IND USA meetingin Q4FY16.

MAB GBR 830

Autoimmune disease targeting OX40MAB, a validated target developedinhouse at Switzerland. Started inQ4FY13.

Open

Phase II studies for AtopicDermatitis patients are beinginitiated in the US and forCoeliacs Disease in EU and US.

NCE Crofelemer HIV associated diarrhea.

Salix its partner in USA commercialized

for USA. Glenmark is the sole supplierof API and is ling in other 140 regionswhere it holds the commercializationrights. It is also supplying API to jaguarAnimal Health.

Commercialized in USA (Salix)and is approved in four others and13 remaining (Glenmark).



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Exhibit 10:


Respiratory driven strong growth to offset externalities:Glenmark has commercialized Fluticasone/ salmeterol (gSeretide/Advair), a US$ 8 Bn product for the innovator expected tolose US patent by Feb-16, in several semi-regulated markets. Glenmark is positioned along with other early generic entrants inthese markets for a niche product which is hard to manufacture and hard to commercialize as well. It has tied up with Celon tomanufacture a DPI inhaler (Dry Powder Inhaler) for 15 European markets. Historically, in Europe, the company has been able tohelp originators expand across Europe by In-licensing their products, which should drive further growth. Glenmark Europe hasposted a CAGR of 31% in FY10-15 and we expect a CAGR of 20.3% in FY15-18E.

Venezuela in LATAM (Latin America) region and Russia in AACIS (Africa, Asia and Commonwealth Independent States)region have been impacted. The Russian currency has depreciated from average 33 Rubles to Dollar to 58 in the last year

The company has also discontinued some prospects on weak data from clinical trials. GBR 401 for anti CD 90 has been stoppedin Q4FY13. Revlimast a big opportunity in asthma and anti in ammatory failed to meet primary end point in Q4FY14. GBR 600for anti platelet condition had been stopped in Q1FY12. In each of the instances, the company has been able to replace thefreed capacity for reasearch partnership quickly indicating a strong pipeline of reserach and willingness of partners to seekexperimental opportunities pursued by Glenmark, until now.

impacting the US$ realized for the company, forex losses and conservativereceivable management impacting sales. Russia has shown strong growthon a constant currency basis and will be further driven by gSerteide launchin H2-FY15. On a consolidated basis, much of the currency depreciationwould have been factored in post H2FY16 and should return higher rateof growth in the region. In the LATAM region, the company has beenaggressively expanding in Mexico and Venezuela; and moderately in Brazilon account of slower approval rate in the region. Venezuela has been involatile environment making repatriation of currency and the exchangerate for the same volatile. We expect a cautious approach in the region willimpact the growth in the region.

Exhibit 11: Russian Currency Depreciation impacting AACIS Revenue Growth (%)

Source: Reserve Bank of India (RBI), Karvy Research

25%

45%

24%36%

27% 25% 18% 18%

36% 30%15% 17%

89%

4% 15% 15%0%

25%

50%

75%

100%

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4

F Y 1 5

F Y 1 6 E

F Y 1 7 E

F Y 1 8 E

Europe Formulations (%)Latin America & Carribean (%)

-50%

-30%

-10%

10%

30%

50%

70%

90%

Q

1 F Y 1 2

Q

2 F Y 1 2

Q

3 F Y 1 2

Q

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Q

1 F Y 1 3

Q

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Q

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Q

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Q

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Q

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Q

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Q

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Q

1 F Y 1 5

Q

2 F Y 1 5

Q

3 F Y 1 5

Q

4 F Y 1 5

Q

1 F Y 1 6

Q

2 F Y 1 6

RUB VS USD (%) AACIS Growth (%)


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Exhibit 12: Business Assumptions

Y/E Mar (Rs. Mn) FY14 FY15 FY16E FY17E FY18E Comments

India Formulations

Revenue 15105 17490 20237 22533 24822The company has grown faster than industry growth onthe back of strong presence in three-four segments. We

expect consolidation in those segments.Revenue Growth (%) 15.3 15.8 15.7 11.3 10.2USA Formulations

Revenue 20270 20398 24503 28974 33644

The approval rate seems to have improved with 8approvals in FY16E. We expect the higher productbasket and strong launches in the next three yearsshould support a strong growth.

Revenue Growth (%) 20.0 0.6 20.1 18.2 16.1AACIS

Revenue 9869 8123 8603 9735 10904

We expect the currency depreciation of Russian Rubleto continue into H2FY16E before it is fully factored into

sales. We expect marginal o set from new launches topartially o set the devaluation.

Revenue Growth (%) 16.2 (17.7) 5.9 13.2 12.0Europe Formulations

Revenue 5061 6445 8057 9507 11218We expect the recent seretide launch and continuedIn-licensing e orts to support the continued momentumof the company in the region.

Revenue Growth (%) 35.9 27.4 25.0 18.0 18.0Latin America & Carribean

Revenue 4046 7640 7946 9137 10508The company is going slow in Venezuela segment in theface of volatility in addition to the continued slow growthrate in Brazil.

Revenue Growth (%) 16.7 88.8 4.0 15.0 15.0API

Revenue 5353 6053 6477 7254 8124

The company has led for a mix of large and nichelings in its API portfolio with expiries in the next three

years, which should support international and also forin-house requirements.

Revenue Growth (%) 34.6 13.1 7.0 12.0 12.0Consolidated

Revenue 60052 66298 75821 87140 99220Revenue Growth (%) 19.8 10.4 14.4 14.9 13.9

EBITDA 10908 10225 16827 19920 22040EBITDA Margins (%) 18.2 15.4 22.2 22.9 22.2

Adjusted PAT 5423 4753 9831 12071 13844

Adj. EPS (Rs.) 20.0 17.5 34.8 42.8 49.1

Adj. EPS Growth (%) (12.7) (12.4) 98.9 22.8 14.7

The earnings of the company are expected to surge onaccount of low one time expenses faced in FY14-15 anddecreasing debt cost on a top line which should delivercomparatively higher growth.

Net CFO 8537 4817 2563 13664 14035The company has litigation related payouts scheduledin the period.

Capex (3766) (5443) (6628) (5713) (7665)Free Cash Flow 4771 (626) (4066) 7950 6370Source: Company, Karvy Research


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0

10000

20000

30000

40000

1 2 3 4 5 6 7 8 9I ndia Form ulat ions U SA Formulat ions

AACIS Europe Formulat ions

Lat in America & Carribean API

Glenmark had higher than normal exchange losses, primarilyfrom Russian operations, legal charges and provisionsprimarily relating to TARKA and dispute with the State of Texas(which have been provisioned earlier), one time expensesrelating to the amalgamation of Glenmark Generics into thecompany (Rs. 650 Mn). We expect EBITDA margins to improveas the one time expenses have been settled, provisions madefor and currencies factoring a signi cant impact in FY15itself. Operationally, Glenmark is now focussing on highermargin pro le in US by replacing highly de ated productsand improved product mix across other regions by increasingtraction of gSeretide to gradually sustain margins above 22%level in the period FY15-18E.

Diversied presence helps revenue growth:The company had built-up presence across regions in India, USA, AACIS, Europe, LATAM and API (Active PharmaceuticalIngredients) from India. By pursuing suitable portfolio of products in the regions, cross leveraging and coordinating acrossregions, the revenue growth gained from the diversi ed presence. The lower base in Europe and LATAM, gaining productapprovals in US and adding geographies across AACIS have helped revenue growth of CAGR of 22% in FY10-15. In FY15,US was a ected by slow down in approvals, LATAM by Venezuela, AACIS by Russia and comparatively slower growth in Indiasimultaneously. We expect strong launches in India and USA, factored externalities in Russia and Venezuela should help growthnormalize at a CAGR of 14% in FY15-18E.

Margins to recover on improved operating conditions:

Exhibit 14: Consolidated Revenue


Exhibit 16:


4 0 2 0 6

5 0 1 2 3

6 0 0 5 2

6 6 2 9 8

7 5 8 2 1

8 7 1 4 0

9 9 2 2 0

36.3%

24.7%19.8%

10.4%

14.4%14.9% 13.9%

0%

10%

20%

30%

40%

0

20000

40000

60000

80000

100000

120000

F Y 1 2

F Y 1 3

F Y 1 4

F Y 1 5

F Y 1 6 E

F Y 1 7 E

F Y 1 8 E

Sales (Rs. Mn) Growth (%)

Exhibit 15: Segment-wise Break-up (Rs. Mn)


FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E

7 1 4 4

1 0 1 5 3

1 0 9 0 8

1 0 2 2 5

1 6 8 2 7

1 9 9 2 0

2 2 0 4 0

17.8%20.3%

18.2%

15.4%

22.2%22.9% 22.2%

10%

14%

18%

22%

26%

0

5000

10000

15000

20000

25000

F Y 1 2

F Y 1 3

F Y 1 4

F Y 1 5

F Y 1 6 E

F Y 1 7 E

F Y 1 8 E

EBI TD A (R s. M n) EBI TD A Margin (%)

Exhibit 13: Karvy vs ConsensusKarvy Consensus Divergence (%) Comments

Revenues (Rs. Mn)

FY16E 75821 77502 (2.2)

We are conservative in our estimates of revenueand margins considering the approval rate indi erent geographies.

FY17E 87140 97644 (10.8)

FY18E 99220 108933 (8.9)EBITDA (Rs. Mn)

FY16E 16827 17110 (1.6)

FY17E 19920 25073 (20.5)

FY18E 22040 26397 (16.5)

EPS (Rs.)

FY16E 34.8 34.5 0.9

FY17E 42.8 54.5 (21.5)

FY18E 49.1 59.3 (17.2)Source: Bloomberg, Karvy Research


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Easing Capital Structure:Glenmark operated at a marginally higher level of debt and more importantly the forex volatility also impacted the pro tability.Glenmark raised Rs.9,450 Mn from issue of shares through preferential allotment in early FY16 primarily to reduce the debtoutstanding. We expect the debt equity ratio to be below unity in the FY15-18E easing the capital structure. The companysrepayment ability, as measured by the debt servicing ratio, was a bit precarious in FY15 and should return to a comfortablerange in the period. While the interest coverage was strong all through, the lower interest burden from paid-o debt apart from

the expanding margins will drive higher pro tability in the period.

Returns to normalize in a higher range:In a period of exceptional expenses impacting pro tability, the returns declined in FY15. We expect as the pro t una ected byevents and currencies as mentioned and lower nance cost should improve along with marginal improvement in asset utilization.Even with lower leverage in the capital structure, the returns should normalize at 20% range by FY18E.

The company has had higher debt in the capital structure until recently, which has been addressed to an extent recently.

Exhibit 17:


Exhibit 19: Dupont Breakup of Returns


Exhibit 18:


Exhibit 20: RoE Vs RoCE


Exhibit 21: Company Snapshot (Ratings)Low High

1 2 3 4 5

Quality of Earnings 3 Domestic Sales 3 Exports 3 Net Debt/Equity 3 Working Capital Requirement 3 Quality of Management 3 Depth of Management 3 Promoter 3 Corporate Governance 3 Source: Company, Karvy Research

1.0 0.9 1.0 1.1 1.3 0.7 0.5 0.4

4.7

2.11.5 1.5

1.0 1.2

3.2

2.1

0.0

1.0

2.0

3.0

4.0

5.0

0

10000

20000

30000

40000

F Y 1 1

F Y 1 2

F Y 1 3

F Y 1 4

F Y 1 5

F

Y 1 6 E

F

Y 1 7 E

F

Y 1 8 E

Debt (Rs. Mn) (LHS) Debt-Eq uity ( x) DSCR ( x)

6381 62578948 8788 7830

14196

1693618853

1605 1466 16001886 1902

2123

18591654

0

500

1000

1500

2000

2500

0

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10000

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20000

F Y 1 1

F Y 1 2

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F Y 1 7 E

F Y 1 8 E

EBI T (R s. M n) Financ e c os ts (R s. M n)

0

1

2

3

4

0%

25%

50%

75%

100%

FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18EOperational efficiency (%) Total Asset Efficiency (%)RoE (%) Financial leverage (RHS) (x)

20.5%

23.8%

18.8%15.9%

25.0%

22.2%20.8%

26.2% 26.4%

20.6%

17.6%

26.8% 26.9% 27.2%

15%

20%

25%

30%

F Y12 F Y13 F Y14 FY15 F Y16E FY17E FY18E

RoE (%) RoCE (%)


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Valuation & Outlook Glenmark can look forward to regaining the momentum interrupted in FY15. In USA, the company has strong launch opportunitiesin gZyvox, gZetia and gVoricanozole. In litigation process are gAlimta and gAzeliac acid; and another opportunity is uncertainon timing gWelchol. GDUFA has a targeted plan for reducing average approval time signi cantly and any improvement in thesame should work in the favour of companies like Glenmark which have signi cant lings pending. In India, the company has

sustained a strong momentum and can be expected to increasing presence in other therapeutics apart from the therapies ithas consolidated. The other regions are expected to regain the earlier momentum after factoring in externalities. In the novelspace, the company can look forward to milestones for existing partnerships or a new licensing announcement. GBR 900, BEATplatform and GRC 27864 are some of the opportunities which may be monetized in the near term from milestones or initiatingnew deals.

Glenmark has been trading in the 20-25x PE range before the one time extraordinary expenses had impacted the earnings, evenas the valuation was una ected leading to a spike in the PE valuation multiple. We are valuing Glenmark at its historical averageone year forward PE of 22.7x for its FY18E EPS of Rs.49.1 for a target price of Rs.1,116 per share. We are initiating coverage ofGlenmark with a BUY recommendation and an upside of 20% to current price.

Exhibit 22: 1Yr Forward Vs TTM PE

Source: BSE, Company, Karvy Research

Exhibit 23: PE Band

Source: BSE, Company, Karvy Research

0

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Price 15x 20x 25x 30x 40x 50x

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5

Key Risks y Further currency devaluation: Glenmark operates in several di erent regions which involve one or two possible currency

exchanges before they are re ected in the operational statements. With substantial movement in cross currency rates owingto signi cant movement in Quantitative Easing (QE) by central bankers of various regions, the currencies have been volatile.

ySlowdown in Approval rate: The company has faced slow down in approval rates for USA, Brazil and India. The companyis dependent on improvement of the same for its revenue growth.

y Product de ation faster than introduction: The focus on generics manufacturing has been increasing from higher numberof suppliers increasing the bargaining power of the customers resulting in a faster than earlier de ation in generic prices.


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Financials

Exhibit 24: Income StatementYE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E FY18E

Revenues 50123 60052 66298 75821 87140 99220Growth (%) 24.7 19.8 10.4 14.4 14.9 13.9

Operating Expenses 39971 49144 56072 58994 67220 77180

EBITDA 10153 10908 10225 16827 19920 22040Growth (%) 14.0 (10.3) (15.1) 43.9 3.0 (2.8)

Depreciation & Amortization 1270 2168 2600 2754 3135 3392

Other Income 65 48 205 123 151 205

EBIT 8948 8788 7830 14196 16936 18853Interest Expenses 1557 1820 1887 2073 1807 1608

PBT after ext. ordinary items 7390 6969 5943 12124 15129 17245Tax 1107 1513 1190 2292 3058 3400

Adjusted PAT 6200 5423 4753 9831 12071 13844Growth (%) 34.7 (12.5) (12.3) 106.8 22.8 14.7Source: Company, Karvy Research

Exhibit 25: Balance Sheet

YE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E FY18ECash & Cash Equivalents 6052 7948 7637 6571 7370 11243

Sundry Debtors 16400 21563 25118 28401 31551 35897Inventory 8435 9329 12690 13892 15774 17218

Loans & Advances 7852 13951 12962 12800 12236 11748Investments 465 499 473 478 484 490

Gross Block 32968 37786 42017 48645 54358 62023Net Block 28286 30959 33284 37159 39737 44011

CWIP 4161 2009 4589 6968 9019 11663

Miscellaneous 58 78 121 124 128 131

Total Assets 71710 86336 96875 106392 116298 132400Current Liabilities & Provisions 13568 21109 24857 19809 23322 26811

Debt 27649 32670 37999 34300 29691 29532Other Liabilities 2619 2592 4017 3626 3236 2845

Total Liabilities 43836 56370 66874 57735 56250 59187

Shareholders Equity 271 271 271 282 282 282

Reserves & Surplus 27603 29694 29730 48375 59766 72931

Total Networth 27874 29966 30001 48657 60048 73213

Total Networth & Liabilities 71710 86336 96875 106392 116298 132400


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Exhibit 26: Cash Flow StatementYE Mar (Rs. Mn) FY13 FY14 FY15 FY16E FY17E FY18E

PBT 7390 6969 5943 12124 15129 17245Depreciation 1270 2168 2600 2754 3135 3392

Interest 1428 1886 1902 2123 1859 1654

Tax Paid (1650) (2629) (3178) (2292) (3058) (3400)Inc/dec in Net WC (2685) (2901) (2673) (12739) (4047) (5460)Others 727 3044 224 593 646 605

Cash ow from operating 6479 8537 4817 2563 13664 14035

Inc/dec in capital expenditure (4710) (3766) (5443) (6628) (5713) (7665)Inc/dec in investments 69 85 42 (3) (3) (3)

Cash ow from investing (4641) (3681) (5400) (6631) (5717) (7668)

Inc/dec in borrowings 4475 2046 4807 (3699) (4609) (160)

Issuance of equity 65 125 20 9504 0 0

Dividend paid (643) (632) (635) (680) (680) (680)Interest paid (1465) (1943) (1792) (2123) (1859) (1654)

Others (480) (577) (409) 0 0 0

Cash ow from nancing 1952 (980) 1992 3002 (7148) (2493)

E ect of exchange rate changes (940) (1980) (1719) 0 0 0

Net change in cash 2851 1896 (311) (1067) 799 3874Source: Company, Karvy Research

Exhibit 27: Key RatiosYE Mar FY13 FY14 FY15 FY16E FY17E FY18E

EBITDA Margin (%) 20.3 18.2 15.4 22.2 22.9 22.2EBIT Margin (%) 17.9 14.6 11.8 18.7 19.4 19.0

Dividend Payout (%) 8.7 10.0 11.4 5.7 4.7 4.1

Net Pro t Margin (%) 12.4 9.0 7.2 13.0 13.9 14.0

Net Debt/Equity (x) 1.0 1.1 1.3 0.7 0.5 0.4RoE (%) 23.8 18.8 15.9 25.0 22.2 20.8

RoCE (%) 26.4 20.6 17.6 26.8 26.9 27.2Source: Company, Karvy Research

Exhibit 28: Valuation ParametersYE Mar FY13 FY14 FY15 FY16E FY17E FY18E

EPS (Rs.) 22.9 20.0 17.5 34.8 42.8 49.1DPS (Rs.) 2.0 2.0 2.0 2.0 2.0 2.0

BV (Rs.) 102.9 110.5 110.6 172.4 212.8 259.5PE (x) 20.2 28.3 44.7 26.5 21.6 18.8

P/BV (x) 4.5 5.1 7.1 5.4 4.3 3.6

EV/EBITDA (x) 14.5 16.3 23.8 17.1 14.2 12.7EV/Sales (x) 2.9 3.0 3.7 3.8 3.2 2.8Source: Company, Karvy Research; *Represents multiples for FY13, FY14 & FY15 are based on historic market price


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Stock Ratings Absolute ReturnsBuy : > 15%Hold : 5-15%Sell :

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Glenmark Pharma