Glenmark Pharma. (GLENMARK)

FairStock Score: 41/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Low leverage: Debt/Equity of 0.13 and Altman Z-Score of 4.74 indicate strong financial stability.
• Recent operating momentum: Sales grew 25.44% and profits 55.23%, with ROCE at a solid 19.40%.
• Piotroski F-Score of 7/9 suggests decent operational and financial health.
• Promoter holding of 46.65% aligns management interests with minority shareholders.

Concerns

• Negative free cash flow of ₹-770 Cr raises serious questions about earnings quality.
• Valuation is expensive: P/E 22.28, P/B 7.45, EV/EBITDA 27.84, and a Graham Number of ₹516 implies a negative margin of safety of -314.07%.
• 5-year revenue CAGR of just 4.01% shows the recent high growth is not historically consistent.
• Dividend yield of 0.12% offers negligible income support in a weak price scenario.

AI Analysis

Let's look at Glenmark Pharma. On the surface, the latest numbers look appealing: sales grew 25.44%, profits jumped 55.23%, and ROCE is a healthy 19.40%. But as Graham taught us, one year's earnings tells you little. Over the past five years, revenue compounded at only 4.01% — that's not the mark of a franchise with durable growth. Free cash flow is negative at ₹-770 crore, which means despite all the reported profit, the business is consuming cash. A company that cannot convert earnings into cash is living on accounting hope. The balance sheet is decent: debt/equity is 0.13 and Altman Z-score 4.74 indicates safety. ROE at 12.04% is acceptable but not exceptional. Valuation, however, is far from attractive. At ₹2,337, the stock trades at 22.28 times earnings, 7.45 times book, and 27.84 times EV/EBITDA. The Graham Number is only ₹516, implying a negative margin of safety of more than 300%. In other words, you are paying a premium for growth that has only recently appeared after years of mediocrity. The promoter holding of 46.65% is reassuring, but with a dividend yield of just 0.12%, you are not being paid to wait. This looks like a cyclical upswing in the pharma space, not a predictable compounding machine. Will the current momentum last? In pharma, regulatory risks, patent cliffs, and pricing pressure always lurk. I'd rather wait for a better price or clearer evidence of sustainable growth and real cash generation.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer