This life science pharma stock has a ROCE of 42.2 per cent; do you hold it?

Shares of the company surged 7 per cent on the day.

The shares of Glenmark Life Sciences surged 7.32 per cent and closed at Rs 414.4. The stock opened at Rs 395.9 and made an intraday high and low of Rs 424.75 and Rs 395.15, respectively.   

Glenmark Life Sciences Ltd is one of the leading developers and manufacturers of select high-value Active Pharmaceutical Ingredients. The company further operates in contract development and manufacturing operations to offer services to speciality pharmaceutical companies. It is a subsidiary of Glenmark Pharmaceuticals Ltd.  

For Q1FY23, the revenue stood at Rs 490 crore, a YoY decrease of 6.07 per cent, and a QoQ decline of 4.7 per cent. However, there was an improvement in the EBITDA margin by 60 bps YoY and 320 bps QoQ. Q1FY23 EBITDA stood at Rs 156.3 crore. For the same quarter, Rs 108.7 crore of net profit was generated.  

The company operates into two segments- Generic API and CDMO (Contract Development and Manufacturing Organization). According to Q1FY23, the Generic API segment contributed about 95 per cent to the total revenue, while 5 per cent came from the CDMO business.  

As per FY22, the company has ROE and ROCE of 29.9 per cent and 42.2 per cent, respectively. While the dividend yield stands healthy at 5.04 per cent.  

About the shareholding pattern, 82.85 per cent of the company’s stake is owned by the promoters, 7.58 per cent by FIIs, 0.79 per cent by DIIs, and the rest 8.78 per cent by non-institutional investors.  

The company belongs to BSE group ‘A’ and has a market capitalisation of Rs 5116 crore. The scrip is trading at a PE multiple of 11.09x and the stock has a 52-week high and low of Rs 675 and Rs 375, respectively.