Is Glenmark Life Science Good Bet for Long-Term Investment?

 

 Market Price: - 733.85

Glenmark Life Science list at 751 with just 4% premium on Indian Stock Exchange as on 06 August 2021. Glenmark Life Sciences initial public offering had received strong response from investors as the offer was subscribed 44.17 times during July 27-29, 2021. The Non-institutional investors reserved portion was subscribed 122.54 times, the qualified institutional buyers were subscribed 36.97 times and the retail portion received 14.63 times subscription. Due to downtrend in Pharma Sector, Glenmark Life Science listed at Just 4% Premium after getting good subscription.

 

 

Glenmark Life Science Limited

Glenmark Life Sciences is an API arm of Glen Mark Pharma, a leading drug maker. They are one of the leading developer and manufacturer of Active Pharmaceutical Ingredients (APIs).

 

Who They Are?

They are in the business of making high-quality drugs by unlocking the possibilities of science. Over the years, they have established strong relationships with leading global generic pharmaceutical companies that have helped us expand our product offerings and geographical reach. They worked with 16 of the 20 largest generic companies globally. They have 120 API in their catalogue. They supply high-quality APIs to more than 540 pharma companies in multiple countries.

What They Do?

They are a research and development (R&D)-driven API manufacturer, focused on undertaking dedicated R&D in our existing products and in areas where they believe there is growth potential in the future. They have steadily built scale in our product offerings and reach, leveraging state-of-the-art laboratories and manufacturing locations. Glenmark Life Science partners with 16 of the top 20 generic companies in the world.

 

My Point of View

Glenmark Life Sciences is an API arm of Glenmark Pharma, a leading drug maker. Glenmark Pharma is a leading manufacturer of Drugs. Company Manufacture lots of Product Like –

Candid - used to treat fungal infections of the skin,

Scalpe - Use for Reduces dandruff, prevents itching, flaking & scaling on the scalp and Prevents hair fall, 

Eptus - Used for heart failure and high blood pressure.

Hair4u - Used for treat common hereditary hair loss.

Favipiravir - Glenmark becomes the first pharmaceutical company in India to receive regulatory approval for oral antiviral Favipiravir, for the treatment of mild to moderate COVID-19.

Itraconazole capsules–As on 15-06-2021, Glenmark Pharma get CDSCO (Central Drugs Standard Control Organization) Panel NOD for Manufacturing and Marketing of Itraconazole capsules. Itraconazole capsules are used to treat fungal infections in the lungs that can spread throughout the body.

All these Drugs are commonly used in India.

 

Glenmark export their products in Europe, Latin America, North America, Japan, and the rest of the world. Glenmark Life Science partners with 16 of the top 20 generic companies in the world. Considering all these factors it is very good bet for long-term investment.

Now Take a look on credentials which show Glenmark Life Science is a Good Stock for Long Term.

 Now Take a look on credentials which show Glenmark Life Science is a Good Stock for Long Term.

 

·      Key Point of Glenmark Life Science: -

·        This year, Glenmark Life science Achieved milestone of 403 cumulative drug master files (DMFs) across multiple markets globally (DMF-A Drug Master File (DMF) is a submission to the Food and Drug Administration (FDA) that may be used to provide confidential detailed information about facilities, processes, or articles used in the manufacturing, processing, packaging, and storing of one or more human drugs.)

·        Polar Capital Funds - Healthcare Opportunities Fund bought 8,36,000 equity shares (0.68% stake) of Glenmark Life Sciences at an average price of Rs 732.55 per equity share via bulk deals on the NSE as on 09 August 2021.

·        Glenmark Life Sciences is the Active Pharma Ingredients (API) arm of Glenmark Pharma and has been accounting for about 30-35% of its overall value. Glenmark Pharma has been a listed stock for over 20 years and has a reputation for delivering solid long-term returns. The Glenmark Life Sciences provides an opportunity to participate in the high-growth API segment, which is expected to grow at 8.5% CAGR over next 5 years.

·        Glenmark Life Sciences derives 90% of its revenues from APIs and 10% from CDMO. Within APIs, Glenmark Life is present in the mid-margin generic API segment and the higher margin complex API segment. Most of the APIs manufactured by Glenmark Life are non-commoditized and cater to specialized areas like cardio vascular, central nervous system, diabetes, pain management etc.

·        Glenmark Life has a Blue-Chip global clientele. As of 2020, 16 out of the 20 largest generic manufacturers in the world are customers of Glenmark Life. Nearly 70% of the global customers of Glenmark Life are repeat customers indicating high loyalty coefficient. Its client list includes Teva Pharmaceuticals, Torrent Pharma, Aurobindo Pharma, KRKA and a host of other generic leaders across the world.

·        Glenmark has consistently delivered on numbers and its top line and bottom line speak for themselves. Revenue from operations has more than doubled in the last 2 years to Rs.1,886 crore in FY21. EBITDA margins in the last 2 years have grown from 28% to 31.40% putting it in top league of API margins. Net profits are up 80% over last 2 years and the ROCE has increased from 18.21% in FY19 to 32.69% in FY21.

·        Company Promoters hold 83% holding in the Company.

·       Company delivers good return on equity. In Financial year 2021, the company’s return on Equity is 46.71%. The Weighted Average Return on Equity is 65.88 on last 3 Year.

 

       i.          Parameter of the Company – Here is the combine working of Bs and P&L of Glenmark Life Science,

·       Company has strong Balance sheet.

·       The Assets portion of the company is looking good as compare with liabilities.

·       Company has Sufficient liquid cash to meets its future requirement.

·       The Sale Increase YoY Basis

·       Company has Good Operating and Net Profit which increase YoY Basis.

 

In last, Glenmark Life Science is Good Looking Company under Pharmaceuticals & Drugs Sector. Indian Pharmaceuticals & Drugs Sector give 29.61% return this year. Indian Pharmaceuticals & Drugs Sector is in top 3 Leading Sector in Indian Stock Market. Looking at its Sector, financial and Growth, we can expect a good long-term return on this Stock.

 

 

 

Disclaimer

All the information provided here is only for Educational Purpose. We do not have any personal position in this stock and we are not promoting this company. Please take the Advice of your Financial Consultant before taking any decision.

 

Munish Mahajan

Green Trade Securities