Alembic Pharma - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, Alembic Pharma's (Alembic) performance on the top-line front came in-line with our expectations. However, the company's performance on the bottom-line front was below our expectations, on account of lower-than-expected OPM. However, we maintain our Buy view on the stock.

Top line as per expectations, but net profit comes below expectations: For 4QFY2012, Alembic reported revenue growth of 14.9% yoy to Rs.338cr, with domestic formulation business growing by just 17% yoy. However, the exports segment grew by only 12.5% yoy, because of the decline in the international generics segment – a major contributor to the exports segment. OPM for the quarter grew to 11.6% from 9.0% in 4QFY2011, though it came in lower than our expectations. During the quarter, the company's net profit increased by 97.9% yoy to Rs.20.3cr, below our expectations. Net profit growth was primarily driven by revenue growth and OPM expansion during the quarter.

Outlook and valuation: Alembic's growth and profitability profile has improved post the restructuring carried out by management. Over FY2012-14, we expect the company to post a CAGR of 13.9% and 14.6% in its sales and net profit, respectively. At the CMP, the stock is trading at attractive valuations. Hence, we maintain our Buy view on the stock with a target price of Rs.91.

Source : Equity Bulls

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