Angel Broking recommends Neutral on Alembic Pharma - 3QFY2014 Result Update

For 3QFY2014, Alembic Pharmaceuticals (Alembic) delivered numbers much above our expectations. The net sales came in at Rs. 484cr (vs our expectation of Rs. 420cr), registering a yoy growth of 31.3%. The OPM came in at 21.0% (vs an expected16.6%), posting an expansion of 226bp. While the operating profit grew 47.2% yoy, a higher taxation during the quarter led the company to post a net profit growth of 36.6% yoy to Rs. 65.4cr (vs our expectation of Rs. 45cr). We maintain our Neutral rating on the stock.

Results better than expectations: For 3QFY2014, Alembic Pharmaceuticals delivered numbers much above our expectations. The net sales came in at Rs. 484cr (vs an expected Rs. 420cr), registering a yoy growth of 31.3%. The growth was driven by exports, which posted sales of Rs. 1,493cr (vs Rs. 761cr in 3QFY2013), registering a yoy growth of 96.1%. The domestic sales stood at Rs. 2,570cr (vs Rs. 2,277cr in 3QFY2013), registering a yoy growth of 12.9%, with domestic formulations growing at 15% yoy. The company's OPM came in at 21.0% vs an expected 16.6%, posting an expansion of 226bp. While operating profits grew by 47.2% yoy, a higher taxation during the quarter led the company to post a net profit growth of 36.6% yoy to end the period at Rs. 65.4cr (vs our expectation of Rs. 45cr).

Outlook and valuation: Alembic's growth and profitability profile has improved post the restructuring carried out by the Management. Over FY2013-15, we expect the company to post a CAGR of 20.1% and 31.3% in sales and net profit respectively. We recommend a Neutral rating on the stock.

Source : Equity Bulls

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