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Glenmark:Margins expand

Jun 11, 2002

Glenmark Pharmaceuticals Ltd, one of the leading pharma companies in dermatology segment (which deals with skin infections) has shown an impressive performance for the year ended March'02. While, sales have improved by 25%, operating margins have shown an improvement of more than 480 basis points, which is remarkable. However, higher interest and depreciation expenses diluted bottomline growth. The bottomline growth was still impressive at 34%.

(Rs m)FY01FY02% Change
Sales 1,923 2,402 24.9%
Other Income 21 16 -26.0%
Expenditure 1,624 1,915 17.9%
Operating Profit (EBDIT) 299 486 62.7%
Operating Profit Margin (%)15.5%20.3%
Interest 83 129 55.1%
Depreciation 51 88 73.0%
Profit before Tax 186 285 53.1%
Extraordinary Income - -
Tax 15 57 272.5%
Profit after Tax/(Loss) 171 228 33.5%
Net profit margin (%)8.9%9.5% 
No. of Shares (eoy) (m)10.110.1 
Diluted Earnings per share*16.922.6 
P/E (at current price)7.212.0 
(*- annualised)   

Glenmark is a leader in the dermatology segment which contributed around 35% to its turnover. After the acquisition of Flucort (Lyka brand) the company also has considerable presence in the steroid segment of the dermatology market. The company has also identified the anti-diabetes market as a key growth area in future. A separate marketing force catering specifically to this market has also been set up, comprising an all-India sales force of 130 medical representatives.

The company's newly introduced division ‘Healtheon’ in the fast growing anti-diabetes market recorded impressive performance during the year. It may be recalled that the company has a tripartite agreement with Biobrass (the world’s third largest manufacturer of human and porcine insulin) and Ambalal Sarabhai to market insulin’s in the domestic market. Under the agreement Ambalal Sarabhai is importing insulin crystals from Biobrass to manufacture finished dosages and Glenmark is marketing the products.

Glenmark is striving to take a lead in research activities. In a significant development, the company has recently filed patent for a new anti-asthma drug, that is currently completing pre-clinical trials. The company has also initiated dialogues with various MNCs for collaborative research projects.

At the current market price of Rs 270, the stock is quoting at 12x its FY02 earnings. Given the initiatives taken by the company and focus on niche therapeutic segments one can expect the pace of growth to continue in future.

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