Shares of Glenmark Pharma surged by 7.5% in early trading on September 23, 2024, following the company's announcement that its Aurangabad manufacturing facility had successfully passed a routine inspection by the US Food and Drug Administration (USFDA).
The facility cleared the inspection without receiving any observations, a positive outcome that significantly boosted investor confidence. This development is crucial for share market investment, as regulatory compliance is often seen as a green light for future growth.
Stock performance and market impact
As of 9:28 AM, Glenmark Pharma’s shares were trading at ₹1,753 on the NSE, with an intraday high of ₹1,759.55, inching close to its all-time high of ₹1,769.60. This rise in the stock price has made Glenmark an attractive option for share market investment, especially for investors seeking to capitalise on short-term gains.
The stock had faced pressure in the previous week due to concerns over the USFDA inspection, leading to a decline of nearly 7%. However, the clearance provided the necessary momentum for the stock to recover and surge.
USFDA clearance a key catalyst for growth
The successful inspection of the Aurangabad facility, which serves as a vital alternative to Glenmark’s Goa plant for supplying drugs to the US market, has been a critical factor in the stock's rebound. The USFDA conducted its inspection between September 9 and 20, 2024.
The approval of this facility alleviates investor concerns, as any adverse outcomes from regulatory inspections could have negatively impacted the stock. For those engaged in share market investment, this regulatory approval serves as a significant positive indicator for Glenmark's future prospects.
Brokerage firms optimistic about Glenmark's future
Brokerage firm Investec has responded positively to the news, initiating a 'fast long' position on Glenmark Pharma's stock. The firm has given a 'buy' recommendation with a price target of ₹1,900, representing a potential upside of over 16% from the stock’s previous close.
This is encouraging news for those involved in share market investment, as Glenmark's stock now presents an opportunity for both short-term gains and long-term growth. Investec views the regulatory clearance as a near-term catalyst for further earnings momentum and robust cash flow generation.
Glenmark's market presence and financial performance
Investec has also highlighted that over 70% of Glenmark's EBITDA comes from India and the Rest of the World (RoW) markets, positioning the company for strong performance in these regions. This diverse market presence offers a solid foundation for share market investment, as it reduces reliance on any single market.
Furthermore, Glenmark’s recent financial performance has been impressive. The company reported a more than two-fold increase in consolidated net profit to ₹340.2 crore for the June quarter of 2024, compared to ₹37.7 crore in the same period last year.
Revenue and profit growth: Indicators of long-term potential
Glenmark Pharma's revenue from operations rose by 6.9% to ₹3,244.2 crore in the June 2024 quarter, up from ₹3,036 crore in the same period of the previous year. This steady revenue growth, coupled with a 34.5% rise in EBITDA to ₹588.3 crore, showcases the company's operational efficiency and profitability.
For investors considering share market investment, these financial metrics underscore Glenmark’s potential for continued growth, driven by both regulatory successes and strong market presence.
Why now is the perfect time to consider Glenmark for share market investment
Glenmark Pharma's stock is showing significant upward potential following the USFDA’s approval of its Aurangabad facility. With positive financial performance and optimism from brokerage firms, the stock remains a strong contender for those looking to make smart share market investments.
For android only