Alembic Pharma - 1QFY2013 Result Update - Angel Broking

Alembic's 1QFY2013 results have come below expectations. On the sales front, the company grossed sales of Rs.366cr, registering a revenue growth of 6.6% yoy, lower than our expectations of Rs.390cr. On the operating front, the company posted an OPM of 14.3% vs an expectation of 15.3%. This, along with lower than expected net sales, lead the net profits to come below expectations at Rs.31cr (expectation was of Rs.33cr). At the current market price, the stock is trading at an attractive valuation. Hence, we maintain our Buy view on the stock.

Results below expectations: Alembic reported revenue growth of 6.6% yoy to Rs.366cr, mainly driven by the domestic formulation business growing by 14% yoy. However, the exports segment grew by a mere 1% yoy, impacted by de-growth of active pharmaceutical ingredient (API) exports (which de-grew by 37% yoy). On the operating front, the company posted an OPM of 14.3% vs expectations of 15.3%, which along with lower than expected net sales lead to the net profits coming below expectations at Rs.31cr (vs expectations of Rs.33cr).

Outlook and valuation: Alembic's growth and profitability profile has improved post the restructuring carried out by the management. Over FY2012-14, we expect the company to post a CAGR of 13.3% and 14.6% in sales and net profit respectively. At the current market price, the stock is trading at attractive valuations. Hence, we maintain our Buy recommendation on the stock with a target price of Rs.91.

Source : Equity Bulls

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