Angel Broking recommends Neutral on Alembic Pharma - 4QFY2014 Result Update

For 4QFY2014, Alembic Pharmaceuticals (Alembic) delivered numbers much ahead of our estimates on the OPM front; however, the net profit came in below expectations. The net sales came in at Rs. 463cr V/s an expected Rs. 492cr, registering a yoy growth of 23.4%. The company's OPM came in at 19.6% V/s 18.7% expected, posting an expansion of 248bp yoy, which led the company to post a net profit growth of 40.4% yoy to Rs. 61cr V/s our expectation of Rs. 69.9cr. We maintain our Neutral rating on the stock.

Results better than expectations on the OPM front: For 4QFY2014, Alembic delivered numbers much above our expectations on the OPM front. Net sales came in at Rs. 463cr V/s an expected Rs. 492cr, registering a yoy growth of 23.4%. The growth was driven by exports, which rose 58.6% yoy. Domestic sales on the other hand stood at Rs. 199.5cr V/s Rs. 175.3cr in the corresponding quarter of last year, registering a yoy growth (with domestic formulation growth) of 14%. The company's OPM came in at 19.6% V/s an expected 18.7%, posting an expansion of 248bp yoy, which led the company to post a net profit growth of 40.4% yoy to Rs. 61cr V/s our expectation of Rs. 69.9cr.

Outlook and valuation: Alembic's growth and profitability profile has improved post the restructuring carried out by the Management. Over FY2014-16, we expect the company to post a CAGR of 16.1% and 14.6% in sales and net profit respectively. We recommend a Neutral rating on the stock.

Shares of ALEMBIC PHARMACEUTICALS LTD. was last trading in BSE at Rs.294.9 as compared to the previous close of Rs. 297.55. The total number of shares traded during the day was 51446 in over 3131 trades.

The stock hit an intraday high of Rs. 301.65 and intraday low of 291.35. The net turnover during the day was Rs. 15229011.

Source : Equity Bulls

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