Glenmark Pharma shares soar 33% in a month; Choice retains 'Buy' with more upside seen

Shares of Glenmark Pharmaceuticals Ltd were last seen trading marginally higher by 0.17 per cent at Rs 2,206.70 in Thursday's trade. At this level, the stock has surged 33.44 per cent over the past month.

Choice Institutional Equities has reiterated its positive stance on Glenmark Pharma following a major licensing deal between its wholly-owned subsidiary, Ichnos Glenmark Innovation (IGI) and global biopharma major AbbVie. The deal, valued at $1.925 billion, includes a significant upfront payment of $700 million for IGI's multiple myeloma asset, ISB 2001. The domestic brokerage notes that this is one of the largest global transactions of its kind.

Choice highlighted that the transaction makes IGI self-sustaining, which in turn eases Glenmark's innovation funding burden. It also provides a strong pathway for EBITDA margin expansion, with Glenmark's management guiding for a 23 per cent margin over the next three years -- translating to an improvement of around 535 basis points (bps) over FY25 levels.

"This development, along with Glenmark's strong growth initiatives, supports its 'Glenmark 3.0' roadmap," Choice stated in its report. As a result, the brokerage has revised its FY26E and FY27E earnings estimates upward by 20.0 per cent and 7.1 per cent, respectively, and introduced FY28E.

Given the long-term revenue visibility from ISB 2001 through royalties and milestone payments, in addition to upcoming respiratory launches, Choice has shifted to a DCF-based valuation approach. Consequently, it has raised its target price on the stock to Rs 2,545, up from Rs 1,670 in Q4 FY25, and maintained its 'BUY' rating.

However, Choice also flagged key risks to its investment thesis, including Glenmark’s ability to scale its core operations and secure the necessary regulatory approvals for ISB 2001.