What Led To Glenmark Shares’ Steepest Fall In Two Months
An employee operates a filtration machine inside a laboratory. (Photographer: Sara Hylton/Bloomberg)

What Led To Glenmark Shares’ Steepest Fall In Two Months

Shares of Glenmark Pharmaceuticals Ltd. fell the most in nearly two months as a fall in sales in the U.S. offset an improvement across all other markets in the quarter ended September.

The drugmaker’s overall revenue rose 4.9% over the year-earlier to Rs 2,952 crore in the July-September period, according to an exchange filing. That compares with the Rs 2,780-crore consensus estimate of analysts tracked by Bloomberg.

Its net profit fell 8.4% year-on-year to Rs 234 crore, in line with the Rs 217-crore forecast.

“The non-Covid business of the domestic market did not do well. The rise in net debt and the underperformance of the U.S. business can be attributed to the fall in the stock price today,” Surajit Pal, pharma analyst at Prabhudas Lilladher, told BloombergQuint over the phone. The U.S. business contributes around 35% of the company’s overall revenue.

Other highlights (year-on-year)

  • Operating profit, or earnings before interest, tax, depreciation and amortisation, rose 22.7% to Rs 552.8 crore, compared with the estimated Rs 515.9 crore.
  • Ebitda margin expanded 270 basis points to 18.7%.

Segment-wise performance (year-on-year)

  • India business revenue rose 17% to Rs 1,050.6 crore
  • North America business revenue declined 11.2% to Rs 752.1 crore
  • Revenue in the rest of the world market rose 9% to Rs 380.5 crore
  • European business revenue rose 11.6% to Rs 318.1 crore
  • Latin America business revenue fell 19% to Rs 98.3 crore
  • API business revenue rose 19.1% to Rs 321.3 crore

"Glenmark's U.S. business was impacted by stoppage of Ranitidine and a sharp decline in the dermatology portfolio," ICICI Direct wrote in a post earnings note. "Reduction of debt, improvement in free cash flow and margins will be the key events to watch," the note said.

Of the 28 analysts tracking Glenmark, 15 have a ‘buy’ rating, nine recommend a ‘hold’ and the rest suggest a ‘sell’. The average of Bloomberg consensus 12-month target price implies an upside of 10.6%.

Shares ended 5.9% lower at Rs 481.7, snapping a four-day gaining streak. The stock had gained 7% during the July-September period.

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