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Glenmark Pharma: Lower Zetia Sales leads to Subdued Growth - Views on News from Equitymaster
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  • May 18, 2017 - Glenmark Pharma: Lower Zetia Sales leads to Subdued Growth

Glenmark Pharma: Lower Zetia Sales leads to Subdued Growth
May 18, 2017

Glenmark has announced its 4QFY16 results. The company has reported 20% YoY growth in net sales and 30.45% YoY increase in net profits. Here is our analysis of the results.

Performance summary
  • Net sales for the quarter were up by 6.52% YoY during the quarter. US business was up by 53.45% Y-o-Y for the quarter due to Zetia generics which was launched in December 2016. Glenmark's base US business was lower as compared the same quarter last year. India business was muted and saw a moderate growth (6.88%) due to the after effects of demonetization. Domestic sales was also impacted due to lower stock keeping by customers who are waiting for clarity on Goods and Service Tax (GST) rate. The company's Latin America business also suffered due to the base effect arising from Venezuela sales.
  • Operating margins reduced to 18.06% for the quarter from 30.18% in 3QFY16. The decrease in margins was due to lower than expected sales from Zetia and base price erosion in US markets.
  • The bottom line of the company surged just by 30.45% YoY. It can be mainly attributed to sales of Zetia since its launch in December last quarter.

    Financial Performance: A snapshot
    (Rs m) 4QFY16 4QFY17 Change FY16 FY17 Change
    Net sales 21,994 24,244 10.2% 74,579 89,700 20.3%
    Other operating income 1,072 328 -69.4% 1,917 2,156  
    Expenditure 20,032 20,133 0.5% 62,168 71,490 15.0%
    Operating profit (EBDITA) 3,035 4,438 46.3% 14,328 20,366 42.1%
    EBDITA margin (%) 13.2% 18.1%   18.7% 22.2%  
    Other income 116.9 -512.9 -538.6% 200 373 86.4%
    Interest (net) 475 697 46.7% 1,789 2,373 32.7%
    Depreciation 584 689 18.0% 2,691 3,168 17.7%
    Profit before tax 2,092 2,540 21.4% 10,047 15,198 51.3%
    Exceptional Items 0 -809     -2,598  
    Tax 604 -107 -117.7% 3,026 3,442 13.8%
    Minority Interest 0 0.7   0 1  
    Profit after tax/(loss) 1,488 1,837 23.4% 7,022 9,158 30.4%
    Net profit margin (%) 6.8% 7.6%   9.4% 10.2%  
    No. of shares (m)         282.2  
    Diluted earnings per share (Rs)         32.5  
    Price to earnings ratio (x)*         20.8  

    *based on trailing 12 months earnings


    Consolidated Business Snapshot
    4QFY16 4QFY17 Change FY16 FY17 Change
    India 5,398 5,769 6.9% 21,093 23,038 9.2%
    US 6,520 10,004 53.4% 24,203 37,007 52.9%
    RoW 2,980 2,889 -3.1% 9,032 9,888 9.5%
    Europe 2,705 2,298 -15.1% 7,171 7,101 -1.0%
    Latin America 2,416 1,340 -44.5% 7,495 5,181 -30.9%
    API 2,229 1,997 -10.4% 6,683 8,094 21.1%
    Out Licensing Income/ others 819 274   819 1,548  
                 
    Total 23,067 24,572 6.5% 76,496 91,857 20.1%

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