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Eye on Glenmark Pharmaceuticals as a growth stock

19-05-2016 • About Glenmark Pharmaceuticals ($GLENMARK) • By InTwits

Have you thought about Glenmark Pharmaceuticals as a growth stock? Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story


Glenmark Pharmaceuticals showed fast growth in the last financial year. The company's revenue surged on 15.1% in FY2016. At the same time the company well managed its profitability and showed even faster growth in EBITDA of 20.0% for the same period.

If we look for the longer period Glenmark Pharmaceuticals showed fast revenue growth of 15.1% from FY2013 to FY2016 annually. EBITDA surged on 11.0% from FY2013 to FY2016 annually.

Glenmark Pharmaceuticals ($GLENMARK) financials for the last 5 years

mln. INR FY2012 FY2013 FY2014 FY2015 FY2016
Revenue40,20650,12360,05266,29876,340
Revenue growth, %24.7%19.8%10.4%15.1%
SG&A, %8.62%
EBITDA7,14310,48511,00411,93914,328
EBITDA growth, %46.8%4.9%8.5%20.0%
EBITDA margin, %17.8%20.9%18.3%18.0%18.8%
Net Income4,6036,2005,4234,7537,021
Net Income margin, % 11.4%12.4%9.03%7.17%9.20%
 
CAPEX2,8544,7103,7665,4438,903
CAPEX/Revenue, %7.10%9.40%6.27%8.21%11.7%
Debt22,44527,64932,67037,99939,881
Cash3,2016,0527,9487,6378,571
Net Debt/EBITDA2.7x2.1x2.2x2.5x2.2x
 
ROIC, %14.4%17.7%13.8%13.0%15.5%
ROE, %20.7%24.0%18.9%15.9%19.3%

Profitability and return on investment


EBITDA growth was supported by margin expansion. Glenmark Pharmaceuticals's EBITDA margin increased slightly on 0.800 pp from 18% to 18.8% in FY2016. In the longer period Glenmark Pharmaceuticals showed big decline in EBITDA margin of 2.10 pp from 20.9% in FY2013 to 18.8% in FY2016.

Glenmark Pharmaceuticals shows attractive ROIC at 15.5% for the last 12 months which assumes stable development model. Three years ago it was a bit higher at 17.7%. It's average ROIC for the last three years was 14.1%.

Net Income margin surged on 2 pp from 7.20% to 9.20% in FY2016. In the last 3 years Net Income margin dropped on 3.20 pp from 12.4% in FY2013 to 9.20% in FY2016.

Glenmark Pharmaceuticals operates at ROE of 19.3%. For the last three years the average ROE was 18.0%.

Capital expenditures (CAPEX)


To this fast growth Glenmark Pharmaceuticals had to invest in CAPEX.The company's CAPEX/Revenue was 11.7% in FY2016. CAPEX/Revenue surged on 2.27 pp from 9.40% in FY2013 to 11.7% in FY2016. For the last three years the average CAPEX/Revenue was 8.71%.

Leverage (Debt)


Having such a fast growth profile Glenmark Pharmaceuticals keeps medium debt level at 2.2x Net Debt/EBITDA. In the last 3 years Glenmark Pharmaceuticals showed leverage growth of 0.13x from 2.06x in FY2013 to 2.19x in FY2016.

Peers in Pharmaceuticals


Below we provide Glenmark Pharmaceuticals benchmarking against other companies in Pharmaceuticals industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Mangalam Drugs & Organics ($MANGALAM)16.6%-18.2%-2.1%79.8%
Sun Pharmaceutical Industries ($SUNPHARMA)39.9%40.4%42.4%70.2%
Lyka Labs ($LYKALABS)41.9%-25.7%-22.6%68.7%
Marksans Pharma ($MARKSANS)16.7%23.3%43.3%26.8%
Torrent Cables ($TORRCABS)27.5%17.4%-42.9%26.5%
 
Median (41 companies)16.6%14.7%12.6%8.6%15.3%
Glenmark Pharmaceuticals ($GLENMARK)24.7%19.8%10.4%15.1%


Top companies by Gross margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top
Dr.Reddy'S Laboratories ($DRREDDY)52.1%57.4%57.6%59.6%
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%0.0%0.0%
 
Median (2 companies)46.9%26.1%28.7%28.8%29.8%


Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Divi'S Laboratories ($DIVISLAB)37.2%38.2%40.2%37.4%
Hester Biosciences ($HESTERBIO)32.9%
Sun Pharmaceutical Industries ($SUNPHARMA)40.8%44.3%44.9%29.2%
Natco Pharma ($NATCOPHARM)21.5%23.2%24.9%26.2%
Dr.Reddy'S Laboratories ($DRREDDY)25.8%22.9%25.1%23.2%25.8%
 
Median (53 companies)12.7%12.8%14.3%12.0%19.5%
Glenmark Pharmaceuticals ($GLENMARK)17.8%20.9%18.3%18.0%18.8%


Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Claris Lifesciences ($CLARIS)58.1%42.9%103.1%15.8%
Wintac ($WINTAC)22.8%
Hester Biosciences ($HESTERBIO)21.5%
Ipca Laboratories ($IPCALAB)11.2%8.3%11.6%17.8%
Natco Pharma ($NATCOPHARM)24.4%16.3%14.4%14.1%
 
Median (31 companies)8.2%7.5%5.7%6.0%7.5%
Glenmark Pharmaceuticals ($GLENMARK)7.1%9.4%6.3%8.2%11.7%


Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Marksans Pharma ($MARKSANS)-142.4%34.9%33.8%41.2%
Alembic Pharmaceuticals ($APLLTD)27.5%29.1%41.5%35.7%62.1%
Jenburkt Pharmaceuticals ($JENBURPH)34.1%29.0%32.4%35.3%
Abbott India ($ABBOTINDIA)29.6%26.9%30.5%34.2%
Divi'S Laboratories ($DIVISLAB)30.6%30.4%32.3%30.5%
 
Median (63 companies)13.7%13.2%15.6%13.3%14.8%
Glenmark Pharmaceuticals ($GLENMARK)14.4%17.7%13.8%13.0%15.5%


Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Jubilant Life Sciences Limited ($JUBILANT)4.0x3.5x3.5x6.4x
Shasun Pharmaceuticals ($SHASUNPHAR)2.8x4.5x6.0x6.2x
Claris Lifesciences ($CLARIS)1.9x1.1x1.8x3.2x2.9x
Dishman Pharmaceuticals & Chemicals ($DISHMAN)3.6x2.6x2.3x2.9x
Neuland Laboratories ($NEULANDLAB)4.2x3.5x2.6x2.6x
 
Median (48 companies)1.4x1.2x0.3x0.0x1.0x
Glenmark Pharmaceuticals ($GLENMARK)2.7x2.1x2.2x2.5x2.2x