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Research
Alembic Pharmaceuticals - Hem Securities
Posted On : 2012-09-27 21:54:40( TIMEZONE : IST )
Alembic Pharma continues to maintain its market share of 1.62% owing to its strong distribution reach, strong field force and product launches. It has four brands in the list of top 300 brands of industry i.e. 'Azithral', 'Roxid', 'Althrocin' and 'Wikoryl'.
On consolidated basis, the company has posted a rise of about 12% in its net profit at Rs.30.83 crore for the quarter ended June 2012 as compared to Rs.27.56 crore for the same quarter in the previous year. Total income has increased by 6.72% at Rs.366.77 crore for quarter as compared to Rs.343.67 crore for the quarter ended June 2011. R&D cost of the quarter was about 14 Crores, which is about 4.1% of sales. There was the loss of about Rs.3.5 Crores for the quarter largely on the forex denominated loans. Price increase growth is just above 2%, 9% is about volume growth and about 4% is new product introduction. EPS worked out to be 1.64 as against 1.46 for the last corresponding quarter.
The Domestic formulations business posted sales of Rs.197.24 crores against Rs.172.44 crores with a 14% growth over the corresponding quarter of the previous year. Export API recorded sales of Rs.83.48 crores against Rs.60.73 crores registering growth of 37% while domestic API recorded sales of Rs.30.47 crores against Rs.34.75 crores in like quarter last year. International Generic Formulation sales stood at Rs.46.05 crores against Rs. 61.15 crores over the corresponding quarter last year. De-growth was due to price erosion, product mix and capacity constraint.
Cumulative ANDA filings as on June 2012 stands at 49 of which 20 are already approved and cumulative DMF filings are at 63.
Valuation
With strong pipeline of ANDA filings, capacity expansion and sharp growth across business segments and positive guidance by management; Alembic Pharma Ltd. growth outlook looks strong. We believe APL is trading at an attractive valuation at 9.03x and 7.25x of FY13EPS of Rs.7.85 and FY14EPS of Rs.9.77. We initiate a 'BUY' on the stock with a target price of Rs.90 (appreciation of about 27%) with the long term investment horizon.
