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Alembic Pharmaceuticals Ltd Research Report - 09th May 2016

Pharmaceutical | Published on May 09th 2016

IT

Alembic Pharmaceuticals’ 4QFY2016 results have come in below our expectations, on the sales front. The company posted sales of Rs626cr (V/s Rs763cr expected) for the quarter, registering a yoy growth of 24.7%. The growth in sales was driven by international formulations (Rs190.2cr) which grew 20% yoy, while Indian formulations (Rs259.6cr) grew 12% yoy. On the operating front, the EBIDTA margin stood at 22.7% V/s 20.0% expected. The net profit at Rs91.2cr (V/s Rs93.4cr expected), grew 29.7% yoy. We maintain our Neutral rating on the stock. Results below expectations: The company posted sales of Rs626cr (V/s Rs763cr expected), registering a yoy growth of 24.7%. The growth in sales was driven by international formulations (Rs190.2cr) which grew 20% yoy, while Indian formulations (Rs259.6cr) grew 12% yoy. The API business (Rs166.9cr) posted a 95% yoy growth. On the operating front, the EBIDTA margin stood at 22.8% V/s 20.0% expected. The gross margin expanded to 80.2% V/s 65.3% in the corresponding period of last year; however the expansion in the OPM was relatively lower as R&D expenditure during the quarter stood at 17.8% of sales V/s 6.1% of sales in 4QFY2015. The company posted a net profit of Rs91.2cr (V/s Rs93.4cr expected), up 29.7% yoy. 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 600
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)11,917.91
MCAP NSE (Rs in Cr)11,878.33
P/E (x)20.39
EPS (Rs.)31.00
BV (Rs.)88.59
Div Yield (%)0.63
FV (Rs.)2.00
P/BV (x)6.95
EV/Sales (x)3.68
EV/EBITDA (x)12.75

Shareholding Pattern (%)

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

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