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Alembic Pharma - In-line Results - Nirmal Bang
Posted On : 2013-08-18 19:45:46( TIMEZONE : IST )
Alembic Pharma reported sales growth of 16.6% yoy to Rs 426.4 cr, which was marginally higher than expectation, though EBITDA and PAT were in-line. However, we fell the company is on track of achieving its 20% sales target for the year.
- Domestic business grew by 6% yoy on the back of hiccups faced by the industry in general on implementation of DPCO policy. This is disturbed the sales at stockist's level and thus impacted the company.
- Exports grew by 33.5% led by generics business in regulated markets
- API business declined by 6% (domestic down 33.7% yoy but exports grew 4% yoy). However this is in-line with the management's objective of focusing on margins and exiting low margin API business. Management seems confident that in future they can see growth in the business.
- EBITDA margins improved 250 bps yoy tp 16.8%
- Company recorded net forex gain of Rs 3-4 cr, included in other operating income
- During the quarter APL received approvals for two ANDAs. Total pending approvals are 26 out of 57 filed. The company is expected to file 12 ANDAs during the year.
- It filed one DMF filed in US during the quarter taking the cumulative filing to 61. In addition it has filed one Brazilian dossier, one Canadian dossier, two European dossiers and two Australian dossiers.
- APL consistently is managing to reduce its Debt on books. Currently it is Rs 175 cr, down Rs 10 cr from 31st March FY13. Management believes that it can be further reduced to below Rs 100 cr by FY14.
- Although sales are yet to pick up in Desvenlafaxine Base, the management is confident of registering healthy sales in future.
- The management has maintained its outlook of overall 20% growth escorted by 30-35% in international generics, 15% in domestic formulations and 10% in API. Management has also maintained 100-125 bps improvement in EBITDA margins going forward.
Valuation & Recommendation
Considering the improving margins with steady growth and recent re-rating of the stock, We recommend investors to HOLD on the stock and BUY on declines with price target of Rs 181 (13x of FY15E EPS), an upside of 12.5% from current levels.
