Glenmark falls 5% on Venezuela concerns

NEW DELHI: Shares of Glenmark Pharma succumbed to selling pressure on Wednesday, slipping 5 per cent, as political developments in the South American country of Venezuela is seen to be having a negative impact on the company. The Opposition in Venezuela managed to secure majority in Parliament and can introduce sweeping economic reforms that may hurt Indian pharma companies. Glenmark has high exposure to the Latin American market, which accounts for $137 million revenues.

Reacting to the development, the scrip fell 5.77 per cent to hit a low of Rs 876 on the BSE.

Brokerage firm Prabhudas Lilladher said in a research note that the country might even go for a currency devaluation. "We expect many economic reforms to take place in Venezuela, which will make the value of its currency highly volatile initially, as there is a likelihood that the currency will be converted to market-determined rates from a fixed-rate regime," Surjit Pal, associate vice-president, Prabhudas Lilladher, told ET.

"With the most conservative scenario of not considering Venezuela sales in their earnings estimates, we expect Glenmark to miss their annual earnings per share (EPS) of Rs 3.1 in case the new government decides to devalue the Venezuelan Bolivar," Pal wrote.