Technology

For 2QFY2016, Alembic Pharmaceuticals (Alembic Pharma) posted numbers well
ahead of our expectations. It posted an 84.5% yoy growth in sales to end the
period at Rs1,008cr V/s Rs750cr expected. On the operating front, the OPM came
in at 37.2% V/s 27.8% expected and V/s 19.5% in 2QFY2015. R&D expenditure
during the quarter was 9.4% of sales V/s 13.0% of sales in 2QFY2015. The net
profit consequently came in at Rs289cr V/s Rs177.3cr expected and V/s Rs77.3cr in
2QFY2015, a yoy growth of 273.4%. We maintain our Neutral rating on the
stock, considering the fuller valuations.
Results better than expectations: For 2QFY2016, the company posted numbers
well ahead of our expectations. It posted an 84.5% yoy growth in sales to end the
period at Rs1,008cr V/s Rs750cr expected. This was primarily driven by gAbilify’s
launch in the US. Overall formulations were 84% of sales in 2QFY2016, with
international generic accounting for 45% of sales and Indian branded
accounting for 34% of sales. International generics (Rs559.3cr) posted a sales
growth of 342% yoy. The Indian formulation branded sales (`2,846cr) posted a
sales growth of 3.3% yoy. The API business posted a yoy growth of 43% yoy. On
the operating front, the OPM came in at 37.2% V/s 27.8% expected and V/s
19.5% in 2QFY2015. R&D expenditure during the quarter was 9.4% of sales V/s
13.0% of sales in 2QFY2015. The net profit consequently came in at Rs289cr V/s
Rs177.3cr expected and V/s Rs77.3cr in 2QFY2015, a yoy growth of 273.4%.
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 23.1% and 26.1% in sales and net profit, respectively. We
recommend a Neutral rating on the stock.

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