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Alembic Pharmaceuticals Ltd Research Report - 04th Aug 2016

Pharmaceutical | Published on Aug 04th 2016

IT

For 1QFY2017, Alembic Pharmaceuticals posted sales of Rs727cr V/s Rs583cr in 1QFY2016, ie a yoy growth of 24.8%. Formulations (Rs607.6cr) grew 29.3% yoy, while API (Rs128cr) grew 7.0% yoy. On the operating profit front, the OPM came in at 21.4% V/s 17.4% in 1QFY2016 and V/s 22.7% expected. Expansion in the OPM was mainly on back of gross margin expansion to 73.7% (V/s 63.4% in 1QFY2016). R&D Exp during the quarter was 10.9% of sales V/s 8.2% in 1QFY2016. This led the company to post an Adj. net profit of Rs104cr V/s Rs72cr in 1QFY2016, a yoy growth of 44.6%. We maintain our Neutral rating. Results below expectations: For 1QFY2017, the company posted sales of Rs727cr V/s Rs780cr expected and V/s Rs583cr in 1QFY2016, a yoy growth of 24.8%. Formulations (Rs607.6cr) grew 29.3% yoy, while API (Rs128cr) grew by 7.0% yoy. The formulations growth was driven by international formulations (Rs309cr) posting a yoy growth of 72.0%, while Indian formulations (Rs278cr) grew 6.0% yoy. On the operating front, the OPM came in at 21.4% V/s 17.4% in 1QFY2016 and V/s 22.7% expected. Expansion in the OPM was mainly on back of gross margin expansion to 73.7% (V/s 63.4% in 1QFY2016). This led the company to post an Adj. net profit of Rs104cr V/s Rs72cr in 1QFY2016, a yoy growth of 44.6%. Outlook and valuation: Over FY2016-18E, we expect the company to post a CAGR of 13.9% in sales while profitability will be under pressure on back of higher R&D spend, which is likely to reach 13-14% of sales in FY2017-FY2018E. We recommend a Neutral rating on the stock.

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CMP 622
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)12,047.98
MCAP NSE (Rs in Cr)12,072.48
P/E (x)20.61
EPS (Rs.)31.00
BV (Rs.)88.59
Div Yield (%)0.63
FV (Rs.)2.00
P/BV (x)7.02
EV/Sales (x)3.75
EV/EBITDA (x)12.96

Shareholding Pattern (%)

Promoter74.0
Foreign11.0
Public & Others11.0
Institution3.0
Corporate1.0
Grand Total100.0

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