Q3 results were a mixed bag. While operational performance was below I-direct estimates amid lower than expected International (mainly US) and API sales, net profit was higher due to higher-than-expected profit contribution from Rhizen Phama (one-off). Revenues grew 8.7% YoY to Rs. 1314 crore led by strong growth in domestic, ROW formulations and API segment. US sales growth remained muted (down 0.6% YoY) at Rs. 512 crore due to competition in Sartans. Domestic formulations grew 13.6% YoY to Rs. 418 crore. EBITDA margins expanded 89 bps YoY to 27.8% due to better gross margins and lower R&D cost. Subsequently, EBITDA grew 12.3% YoY to Rs. 365 crore. Net Profit grew 24.9% YoY to Rs. 293 crore.
Valuation & Outlook
Key takeaways from Q3 numbers were domestic revival and continued traction from ROW and API segments (that hitherto were lumpy). Owing to increased competition in the Sartan portfolio, the management expects US quarterly sales to likely remain at ~US$70 million in the near term despite new launches. On the domestic front, the management expects a steady run rate going forward. Additionally, in the API segment with Chinese players coming back into the market, the management expects some sales moderation but expects a steady growth. Apart from this, the management is aggressively spending in R&D and manufacturing for US oncology, injectables, derma segments which provides growth optimism for medium to long-term but may impact near term margins. We change from BUY to HOLD rating and arrive at a target price of Rs. 1055 (vs. Rs. 1170 earlier) based on 20x FY23E EPS of Rs. 52.7.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AlembicPharma_Q3FY21.pdf
Shares of ALEMBIC PHARMACEUTICALS LTD. was last trading in BSE at Rs.979.75 as compared to the previous close of Rs. 1029.9. The total number of shares traded during the day was 45597 in over 3580 trades.
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