Technology

Alembic Pharmaceuticals (Alembic Pharma) posted better-than-expected results
for 3QFY2016. It posted an 81.8% yoy growth in sales for the quarter to Rs921cr
V/s Rs507cr in 3QFY2015 (and V/s an expected Rs700cr). Sales growth was mainly
driven by the international business, which posted a 248% yoy growth, while the
Indian branded formulation business posted a 15% yoy growth. Consequently, on
the operating front, the EBITDA margin came in at 41.7% V/s 20.1% in
3QFY2015 (and V/s an expected 27.5%). The same was aided by gross margin
expansion, which came in at 77.6% V/s 65.6% in 3QFY2015. The R&D
expenditure during the quarter was 7.6% of sales V/s 6.0% of sales in 3QFY2015.
Thus, the PAT came in at Rs269cr V/s Rs71cr in 3QFY2015 (and V/s an expected
Rs160cr), a yoy growth of 281.4%. We maintain our Neutral rating on the stock
considering fuller valuations.
Results better than expectations: Alembic Pharma posted better-than-expected
results for 3QFY2016. It posted an 81.8% yoy growth in sales for the quarter to
Rs921cr V/s Rs507cr in 3QFY2015 (and V/s an expected Rs700cr). Sales growth was
mainly driven by the international business, which posted a 248% yoy growth,
while the Indian branded formulation business posted a 15% yoy growth.
Consequently, on the operating front, the EBITDA margin came in at 41.7% V/s
20.1% in 3QFY2015 (and V/s an expected 27.5%). The same was aided by gross
margin expansion, which came in at 77.6% V/s 65.6% in 3QFY2015. The R&D
expenditure during the quarter was 7.6% of sales V/s 6.0% of sales in 3QFY2015.
Thus, the PAT came in at Rs269cr V/s Rs71cr in 3QFY2015 (and V/s an expected
Rs160cr), a yoy growth of 281.4%.
Outlook and valuation: Alembic Pharma’s growth and profitability profile has
improved post the restructuring carried out by the Management. Over
FY2015-17E, we expect the company to post a CAGR of 36.1% and 38.2% in
sales and net profit, respectively. We recommend a Neutral rating on the stock.

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