- Target
- ₹2,100
- At report
- ₹2,230−6% printed
- Vs our close
- −14.0%
ICICI Securities maintains HOLD on Glenmark Pharmaceuticals after Q1FY27 revenue beat estimates (up 18% YoY ex out-licensing income) on strong India, US and emerging-market growth, but EBITDA and profits lagged as gross/EBITDA margins contracted ~122bps/119bps YoY on raw material cost pressure. The broker keeps its TP unchanged at INR2,100 (20x FY28E EPS plus INR225 NPV for NCE pipeline), citing management's reiterated FY27 EBITDA margin guidance of 21-22% and out-licensing of ISB 2301 as a key near-term trigger, while flagging that margin recovery has yet to catch up with the revenue momentum.
- Revenue grew 18% YoY (ex USD17.5mn Abbvie licensing income) to INR38.5bn, ahead of I-Sec's INR35.8bn estimate, driven by India (+15.5% YoY), US (+8.5% YoY, +19.8% ex out-licensing) and emerging markets (+27.7% YoY)
- India business grew 15.5% YoY to INR14.3bn on strong dermatology, respiratory, cardiology and oncology traction; broker expects India to grow at 21.8% CAGR over FY26-28E
- US business expected to accelerate at 15.3% CAGR over FY26-28E, aided by gFlovent launch, Monroe plant relaunches and upcoming differentiated injectables contributing meaningfully from FY28
- Gross margin contracted 122bps YoY to 67.7% and EBITDA margin fell 119bps YoY to 16.6% (vs I-Sec estimate of 18.4%) on raw material cost pressure and higher overheads
- Management reiterated FY27 EBITDA margin guidance of 21-22%, expecting improvement via better product mix and operating leverage
- ISB 2301 IND application planned for filing in CY26 with trials starting CY27; out-licensing of this molecule seen as a key near-term trigger, similar to the prior ISB 2001 deal with Abbvie
- Delay in ramp-up of key products
- Higher-than-expected cash burn in the Innovative Global Institute (IGI) biologics business
- Elevated API prices, logistics disruptions and higher operating expenses could dent margins near term
- Europe regional growth was muted in the quarter (constant currency growth of only 1.2%)
- Net Sales INR38,531mn, up 18.0% YoY (up 6.6% QoQ)
- Gross margin 67.7%, down 122bps YoY
- EBITDA INR6,394mn, up 10.1% YoY; EBITDA margin 16.6%, down 119bps YoY
- Adjusted PAT INR3,688mn, up 17.9% YoY (down 18.5% QoQ)
- India revenue INR14,321mn, up 15.5% YoY (up 40.4% QoQ)
- US sales USD99mn, up 8.5% YoY (up 17.3% QoQ); RoW revenue up 27.7% YoY
- Out-licensing of ISB 2301 molecule following IND filing in CY26
- Additional respiratory launches and differentiated injectables from the Monroe plant
- Ryaltris launch in Brazil (H2FY27) and expansion to 10 more countries; QiNHAYO commercial launch expected FY28
- Faster-than-expected recovery in the US business
| Broker estimates | Unit | FY25A | FY26A | FY27E | FY28E |
|---|---|---|---|---|---|
| Net Revenue | ₹ mn | 1,33,217 | 1,30,008 | 1,58,748 | 1,72,686 |
| EBITDA | ₹ mn | 23,734 | 10,722 | 29,080 | 34,548 |
| EBITDA Margin | % | 17.8 | 8.2 | 18.3 | 20 |
| Net Profit | ₹ mn | 13,894 | 5,104 | 21,056 | 25,845 |
| EPS | ₹ | 49.2 | 18.1 | 74.6 | 91.6 |
| P/E | x | 60.1 | 46.2 | 28.4 | 24.3 |
| EV/EBITDA | x | 26.7 | 57.6 | 20.6 | 16.7 |
| RoCE | % | 16.9 | 6.8 | 21.1 | 21.3 |
| RoE | % | 16.6 | 5.3 | 18.2 | 18.7 |
Valuation: 20x FY28E EPS plus NPV of INR225 for NCE (ISB) pipeline products. Broker maintains HOLD with unchanged TP of INR2,100, valuing the base pharma business at 20x FY28E EPS and adding an unchanged NPV of INR225 per share for the NCE/biologics pipeline. FY27E/FY28E EPS raised by ~4-5% (revenue estimates raised 5.5%/7.3% and EBITDA raised 1.9%/2.8% for FY27E/FY28E) while EPS itself was cut 4.9%/3.4% for FY27E/FY28E, mainly reflecting higher interest costs; TP left unchanged at INR2,100.
Extraction note: The report's own 'Earnings Revisions' table shows Revenue/EBITDA raised and EPS cut for FY27E/FY28E simultaneously (higher interest cost offsetting operating upgrades) — both effects are captured in estimateChanges. Figures are in INR mn as printed; the earnings-revisions percent…