Glenmark Pharmaceuticals CAPEX surged on 63.6% and Revenue surged on 15.1%
12-05-2016 • About Glenmark Pharmaceuticals (
$GLENMARK) • By InTwits
Glenmark Pharmaceuticals reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Glenmark Pharmaceuticals is a fast growth stock: FY2016 revenue growth was 15.1%, 5 year revenue CAGR was 21.0% at FY2016 ROIC 15.5%
- Glenmark Pharmaceuticals has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.5%. At the same time it's a lot of higher than industry average of 6.9%.
- CAPEX is quite volatile: ₹8,903m in FY2016, ₹5,443m in FY2015, ₹3,766m in FY2014, ₹4,710m in FY2013, ₹2,854m in FY2012
- The company has highly profitable business model: ROIC is 15.5%
- It operates with high leverage: Net Debt/EBITDA is 2.2x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 15.1%. Revenue decline was accelerating on average at -5.7 pp per annum in FY2012-FY2016. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.76 pp from 18.0% to 18.8% in FY2016.
Net Income margin increased on 2.0 pp from 7.2% to 9.2% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 11.7%. Glenmark Pharmaceuticals showed CAPEX/Revenue growth of 2.3 pp from 9.4% in FY2013 to 11.7% in FY2016. Average CAPEX/Revenue for the last three years was 8.7%. The company invested a big chunk of EBITDA (62.1%) to CAPEX to secure its growth.
Return on investment
The company operates at good ROIC (15.5%) and ROE (19.3%). ROIC increased on 2.5 pp from 13.0% to 15.5% in FY2016. ROE increased on 3.4 pp from 15.9% to 19.3% in FY2016.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 2.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.4x from 2.5x to 2.2x in FY2016. Debt increased on 5.0% while cash surged on 12.2%.
Glenmark Pharmaceuticals has short term refinancing risk: cash is only 57.1% of short term debt.
Management team
P Ganesh is a the company's CFO. P Ganesh has spent 4 years at the company.
Financial and operational results
Glenmark Pharmaceuticals ($GLENMARK) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 40,206 | 50,123 | 60,052 | 66,298 | 76,340 | 15.1% |
| SG&A | | | | | 6,581 | |
| EBITDA | 7,143 | 10,485 | 11,004 | 11,939 | 14,328 | 20.0% |
| Net Income | 4,603 | 6,200 | 5,423 | 4,753 | 7,021 | 47.7% |
Balance Sheet
|
|---|
| Cash | 3,201 | 6,052 | 7,948 | 7,637 | 8,571 | 12.2% |
| Short Term Debt | 9,320 | 8,446 | 8,383 | 12,256 | 15,008 | 22.5% |
| Long Term Debt | 13,125 | 19,203 | 24,287 | 25,744 | 24,873 | -3.4% |
Cash flow
|
|---|
| Capex | 2,854 | 4,710 | 3,766 | 5,443 | 8,903 | 63.6% |
Ratios
|
|---|
| Revenue growth | 36.3% | 24.7% | 19.8% | 10.4% | 15.1% | |
| EBITDA growth | 20.6% | 46.8% | 4.9% | 8.5% | 20.0% | |
|
|---|
| EBITDA Margin | 17.8% | 20.9% | 18.3% | 18.0% | 18.8% | 0.8% |
| SG&A, % of revenue | | | | | 8.6% | |
| Net Income Margin | 11.4% | 12.4% | 9.0% | 7.2% | 9.2% | 2.0% |
| CAPEX, % of revenue | 7.1% | 9.4% | 6.3% | 8.2% | 11.7% | 3.5% |
|
|---|
| ROIC | 14.4% | 17.7% | 13.8% | 13.0% | 15.5% | 2.5% |
| ROE | 20.7% | 24.0% | 18.9% | 15.9% | 19.3% | 3.4% |
| Net Debt/EBITDA | 2.7x | 2.1x | 2.2x | 2.5x | 2.2x | -0.4x |
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, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jubilant Life Sciences Limited ($JUBILANT) | 4.0x | 3.5x | 3.5x | 6.4x | - |
| Shasun Pharmaceuticals ($SHASUNPHAR) | 2.8x | 4.5x | 6.0x | 6.2x | - |
| Claris Lifesciences ($CLARIS) | 1.9x | 1.1x | 1.8x | 3.2x | 2.9x |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 3.6x | 2.6x | 2.3x | 2.9x | - |
| Neuland Laboratories ($NEULANDLAB) | 4.2x | 3.5x | 2.6x | 2.6x | - |
| |
|---|
| Median (48 companies) | 1.4x | 1.2x | 0.3x | 0.0x | 1.0x |
|---|
| Glenmark Pharmaceuticals ($GLENMARK) | 2.7x | 2.1x | 2.2x | 2.5x | 2.2x |
