Glenmark Pharma witnessed a 6.3 percent drop in its shares during the Friday trading session following its announcement of selling a 75 percent stake in Glenmark Life Science to Nirma at a price of Rs 615 per share. The sale amounts to an equity valuation of Rs 7,535.4 crore (Rs 75,354 million), while Glenmark Pharma will continue to retain a 7.84 percent stake in Glenmark Life Sciences.
Brokerage firm BOFA Securities has reiterated its buy rating for Glenmark Life Sciences shares, setting a target price of Rs 745 per share. The brokerage suggested that, after the deal’s revaluation, the focus will shift towards the company’s earnings trajectory.
BOFA Securities expects high-teen Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) growth from 2024 to 2026, driven by capacity expansion in Dahej and a backward integration project in Ankleshwar. The company has announced additional expansions due to the increased demand, and this, coupled with an increase in the higher-margin CDMO contribution, is expected to drive growth from the current 7-8 percent levels to nearly 15 percent by 2027. Improvements in raw material pricing and savings from Ankleshwar’s backward integration will also contribute to growth.
According to Nuvama, Glenmark Life is not crucial to Glenmark Pharma’s growth, and the path to profitability is unlikely to be affected. Nuvama estimates a three percent profit accretion in 2025 due to the deal and maintains a ‘hold’ rating with a target price of Rs 830 per share.
Glenmark Pharma’s Chairman and MD, Glenn Saldanha, emphasized that the deal aligns with the company’s strategic intent to become an innovative and brand-led organization with a focus on core therapeutic areas. The proceeds from the stake sale will be used to reduce debts and expand into the US market, strengthening shareholder value and enhancing the return profile. The company will continue to focus on consistent growth across its key markets and prioritize return ratios with a net cash-positive balance sheet.
Glenmark Life Sciences is engaged in developing, manufacturing, and supplying non-commoditized active pharmaceutical ingredients (APIs) in chronic therapeutic areas, providing end-to-end support.
