CMP Rs521, Target price Rs575, Upside 10.4%
Glenmark continued to deliver strong growth even in Q4 FY13. We had expected some cool off in Q4 FY13, but, the numbers are well above our estimates. The Company recorded revenue growth of 25.3% yoy to Rs13.3bn, ~8% ahead of our estimate. The overall growth in generic business was 25.2% yoy to Rs5.9bn, where US (+24.9%) and Europe (+62.4%) contributed the most. Specialty business grew by 24.7% yoy to Rs7.4bn. Amongst geographies in specialty segment, India registered strong growth of 32.4% and led most of the out-performance, Latin America revenues grew by 4.7% and Europe climbed up by 25.2% after registering weak performance in last quarter. RoW also continued its strong performance (+21.1%). API segment reported growth of 10.4% yoy to Rs939mn.
US sales grew by 25% yoy in rupee term whereas in dollar terms revenue grew 18% yoy. We believe US business to remain buoyant for next two years backed by company’s strong OC portfolio and niche launches. Additionally, launch of Crofemeler and gaining market share in Mupirocin Calcium (current market share at 81%, launched in January 2013, Brand Size-US$56.5mn) in future will give major boost to US business. In Q4 FY13 the company received 1 ANDA approvals and filed 7 ANDAs. The management also confirmed that they might get 180 day exclusivity for generic version of ‘Finacea’. The Company currently has 83 ANDA approvals and 53 applications pending in various stages of the approval process with the US FDA (includes 21 P IV).
The Indian business grew by a stellar 32.4% vs. industry growth of 7.8% (as per AIOCD AWACS). We believe the launch of Zita and Zitamet combined with several other launches resulted in higher-than anticipated growth. The company has also improved its ranking by 3 places in India to 20th in FY13. Going ahead we expect the growth momentum to take breather on a higher base and slowing domestic growth.
RoW region reported record growth of 21.1% yoy in revenues to Rs2.2bn, largely led by growth in Russia, The secondary sales for the Russian subsidiary continued to post higher growth (59% yoy) (Candid brand sales in Russia doubled sequentially). All other regions in RoW continued to be in high growth trajectory of +20%. We expect robust growth to continue in the RoW business segment.
The business in LatAm region grew by just 4.7%, impacted by devaluation of Venezuelan currency and delays in product approvals in Brazil. Eastern European sales grew by 25% YoY on back of in-licensed products in the region.