Alembic Pharmaceuticals - 2QFY2013 Result Update - Angel Broking

Alembic Pharmaceuticals (Alembic)'s 2QFY2013 results have come above our expectations on the operating front. On the sales front, the company grossed sales of Rs.406cr, registering a revenue growth of 2.2% yoy, just in line with our expecations of Rs.419cr. On the operating front, the company posted an OPM of 15.7% vs an expectation of 14.2%. This lead the net profits to come above expectations at Rs.42cr (expectation was of Rs.35cr). At the current market price, the stock is trading at an attractive valuation. Hence, we maintain our Buy view on the stock.

Results above expectations on operating front: Alembic reported a revenue growth of 2.2% yoy to Rs.406cr, mainly driven by the domestic formulation business which grew by 11.9% yoy. However, the exports segment de-grew by 18.5% yoy, impacted by de-growth of formulation exports (which de-grew by 28.4% yoy). The active pharmaceutical ingredient (API) exports on the other hand de-grew by 4.7%. On the operating front, the company posted an OPM of 15.7% vs expectations of 14.2%, which lead to the net profits coming above our expectations at Rs.42cr (vs our expectation of Rs.35cr).

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

Keywords