Target: ₹615

CMP: ₹424.50

Glenmark Life Sciences (GLS) reported revenue of ₹509.3 crore during Q2-FY23 as against ₹561.8 crore in Q2-FY22, a decline of 9.3 per cent y-o-y. The decline was on account of lower revenue from parent Glen mark Pharma (GPL), which was down 41 per cent y-o-y.

The company reported EBITDA of ₹143.6 crore in Q2-FY23 as against ₹167.34 crore in Q2-FY22, a de-growth of 14.2 per cent y-o-y. PAT came in at ₹106.9 crore (₹115.2 crore)

Revenues from the Generic API segment decreased 4.5 per cent y-o-y (ex-Covid) to ₹453.4 crore.

Europe business picked up in Q2, whereas US business witnessed muted demand. LATAM, Japan and India business (ex-GPL) continue the strong growth momentum.

On the capex front, the capacity expansion at Dahej for API with capacity of 240 kl (30 per cent of the current capacity) was completed during October. The company has also completed a brownfield expansion at Dahej for the oncology plant. The brownfield expansion at Ankleshwar will be operational by Q3-FY23. GLS has received permission for a 1,000-kl plant — greenfield expansion at Solapur.

The current capacity utilisation is 95 per cent during Q2-FY23. The management expects the new Dahej facility to reach 50-60 per cent capacity utilisation within a year. The company has filed four DMF/CEPs across major markets during Q2-FY23 and cumulative filing stands at 440 as on September 30.

It has good margin profile (gross/EBITDA) and is able to sustain the margin despite industry headwinds. With capex coming live, diversification of product portfolio and increasing geographic presence, we expect GLS to perform better.