The shares of this pharmaceutical company surged around 8 percent after the United States Food & Drug Administration’s (USFDA) Good Manufacturing Practice (GMP) inspection at its facility closed with no observations.
Price Movement:
With a market capitalization of Rs. 48,253 crores, the shares of Glenmark Pharmaceuticals Ltd started Monday’s trading session on a higher note at Rs. 1,705 compared to its previous close of Rs. 1,636.75.
During the trading session, the shares hit a high of Rs. 1,764, gaining around 8 percent and are currently trading at Rs. 1,710 apiece.
What Happened:
Such a bullish movement in the share price was observed after the company in an exchange filing announced that the United States Food & Drug Administration (USFDA) completed a Good Manufacturing Practice (GMP) inspection at the Company’s formulation manufacturing facility based out of Chhatrapati Sambhaji Nagar (Aurangabad), India.
The inspection was conducted from 9th September to 20th September, 2024. The inspection closed with no observation.
The Aurangabad facility’s clearance is crucial for Glenmark as it is one of the key manufacturing sites for its generic products. The successful inspection indicates that the facility meets stringent USFDA standards, which is essential for maintaining and expanding its product offerings in the US market.
Financials:
Looking at the company’s financial statements, the revenue jumped by around 6 percent from Rs. 3,063 crores during the March quarter to Rs. 3,244 crores in the June quarter. On the other hand, the net profits showcased a transition from a net loss of Rs. 1,214 crores to a net profit of Rs. 340 crores during the same timeframe.
Brokerage View:
Additionally, the well-known brokerage firm Investec also initiated a ‘fast long’ on the stock. The firm assigned a ‘buy’ call with a price target of Rs 1,900, implying an upside of over 12 percent compared to its current market price.
With the regulatory approval of Glenmark’s important Aurangabad facility, which Investec views as a short-term catalyst, the brokerage anticipates that the drugmaker’s earnings momentum and cash flow generation will continue to be robust.
Furthermore, the brokerage sees Glenmark as more of an India/ Rest of the World play as these two markets contribute over 70 percent of the company’s EBITDA.
Future Outlook:
Glenmark plans to invest Rs 700 crores in capital expenditures to enhance its operational infrastructure and meet growing demand more efficiently.
Furthermore, the pharma company aims to achieve consolidated revenues between Rs 13,500 crore and Rs 14,000 crore, with a target EBITDA margin of approximately 19 pecrent and a double-digit profit after-tax (PAT) margin in FY25.
In addition, the company plans to file at least one additional generic respiratory product in the U.S. during FY25, continuing its momentum in filings beyond this fiscal year.
Company Profile:
Glenmark Pharmaceuticals Ltd is a global research-led pharmaceutical company with a presence across generics, Specialty and OTC business with operations in over 80 countries.
Written By Vaibhav Patil
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