Glenmark Pharmaceuticals said that CRISIL Ratings has revised its outlook on the company's long-term bank facilities to 'Positive' from 'Stable' while reaffirming the rating at 'CRISIL AA-'.
The rating on the short-term bank facilities has been reaffirmed at 'CRISIL A1+', the credit ratings agency said.
CRISIL Ratings said that the outlook revision reflects the continued healthy performance of Glenmark in fiscal 2022, resulting in strong cash generation (over Rs. 1400 crore), which along with proceeds from the initial public offering (IPO) and offer for sale (OFS) of the company's subsidiary, Glenmark Life Sciences (GLS), will lead to faster-than-expected improvement in the company's key debt protection metrics.
Using these proceeds, Glenmark paid-off $145 million term loan in the first half of fiscal 2022 resulting in debt declining to Rs 3,588 crore as on 30 September 2021 from Rs 4,687 crore as on 31 March 2021; debt levels are expected to further reduce by end of fiscal 2022.
CRISIL Ratings anticipates Glenmarks' debt to EBITDA ratio to improve to approximately 1.5 times in fiscal 2022 from 2.2 times in fiscal 2021.
The ratings continue to reflect the expanding presence of Glenmark in the international generics market, its strong position in the fast-growing chronic therapeutic segments in India, and above-average and improving financial risk profile.
These strengths are partially offset by the large working capital cycle, high R&D expenditure primarily towards new molecules and differentiated generics, and exposure to regulatory risks and intensifying competition in the US generics market.
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Glenmark Pharmaceuticals is a global research-led pharmaceutical company with presence across generics, specialty and over-the-counter (OTC) business with operations in over 50 countries.
The drug company posted a 10.1% increase in consolidated net profit to Rs 257.66 crore on a 7.5% rise in net sales to Rs 3,125.43 crore in Q2 FY22 over Q2 FY21.
The scrip shed 0.99% to currently trade at Rs 499.35 on the BSE.
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