Alembic Pharmaceuticals - 1QFY2017 Result Update - Neutral - Angel Broking

For 1QFY2017, Alembic Pharmaceuticals posted sales of Rs. 727cr V/s Rs. 780cr expected and V/s Rs. 583cr in 1QFY2016, ie a yoy growth of 24.8%. Formulations (Rs. 607.6cr) grew 29.3% yoy, while API (Rs. 128cr) grew 7.0% yoy. On the operating profit front, the OPM came in at 21.4% V/s 17.4% in 1QFY2016 and V/s 22.7% expected. Expansion in the OPM was mainly on back of gross margin expansion to 73.7% (V/s 63.4% in 1QFY2016). R&D Exp during the quarter was 10.9% of sales V/s 8.2% in 1QFY2016. This led the company to post an Adj. net profit of Rs. 104cr V/s Rs. 72cr in 1QFY2016, a yoy growth of 44.6%. We maintain our Neutral rating.

Results below expectations: For 1QFY2017, the company posted sales of Rs. 727cr V/s Rs. 780cr expected and V/s Rs. 583cr in 1QFY2016, a yoy growth of 24.8%. Formulations (Rs. 607.6cr) grew 29.3% yoy, while API (Rs. 128cr) grew by 7.0% yoy. The formulations growth was driven by international formulations (Rs. 309cr) posting a yoy growth of 72.0%, while Indian formulations (Rs. 278cr) grew 6.0% yoy. On the operating front, the OPM came in at 21.4% V/s 17.4% in 1QFY2016 and V/s 22.7% expected. Expansion in the OPM was mainly on back of gross margin expansion to 73.7% (V/s 63.4% in 1QFY2016). This led the company to post an Adj. net profit of Rs. 104cr V/s Rs. 72cr in 1QFY2016, a yoy growth of 44.6%.

Outlook and valuation: Over FY2016-18E, we expect the company to post a CAGR of 13.9% in sales while profitability will be under pressure on back of higher R&D spend, which is likely to reach 13-14% of sales in FY2017-FY2018E. We recommend a Neutral rating on the stock.

Shares of ALEMBIC PHARMACEUTICALS LTD. was last trading in BSE at Rs.633.5 as compared to the previous close of Rs. 631.1. The total number of shares traded during the day was 8946 in over 606 trades.

The stock hit an intraday high of Rs. 637.5 and intraday low of 622. The net turnover during the day was Rs. 5667051.

Source : Equity Bulls

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