Shares of Glenmark Life Sciences (GLS) rose 10% in intraday trade on Friday, hitting a 52-week high of Rs 524.75 on the BSE on the back of solid earnings for the company’s March quarter (Q4FY23).
The drugmaker’s net profit rose 48.1% year-on-year to Rs 146.3 crore from Rs 98.8 crore a year ago. Revenue rose 21% year-on-year to Rs 621.3 crore.
This growth was driven by strong momentum in the generic active pharmaceutical ingredient (API) and contract development and manufacturing organisation (CDMO) business, which recovered strongly during the quarter.
Generic API revenue increased 10.4% QoQ and 15.5% YoY in Q4FY23. Growth was led by steady growth momentum in regulated and emerging markets, as well as a strong recovery in the GPL business and continued growth in the external API business, GLS said.
CDMO revenue was Rs 568 crore, doubled QoQ and up 30.4% YoY in Q4FY23. CDMO revenue was driven by a recovery in demand from one project, which was impacted by inventory rationalisation, the company said.
EBITDA increased by 45.2% YoY to Rs 206.4 crore, while profit margin increased by 27.7% YoY to 33.2%, mainly due to higher CDMO contribution, better product mix, PLI program gains and lower input costs.
The stock has risen 40% in the past month, with a 5.4% gain for the S&P BSE Sensex. However, it traded below the issue price of Rs 720 per share. The GLS will debut on the stock market on August 6, 2021.
The company is a leading developer and manufacturer of select, high-value, non-commercialised APIs in the chronic therapeutic area.
An intermediate manufacturing area at the Ankleshwar plant has a manufacturing capacity of 400 KL, of which 192 KL is operational, GLS said. A balance of 208 KL will be operational in Q2FY24.
The company further said it had received the environmental clearance to install 1000 KL of capacity along with CTE (Consent to Establish) for the planned greenfield in Solapur Chincholi Industrial Estate. Construction work will start in FY24.
The company has good margins, which have been maintained despite industry headwinds. Analysts expect GLS to perform better as capital expenditures come online, its product portfolio diversifies, and its geographic presence increases.