Alembic Pharmaceuticals Ltd. share price target

Alembic Pharmaceuticals (Alembic Pharma) posted better-than-expected results for 3QFY2016. It posted an 81.8% yoy growth in sales for the quarter to Rs921cr V/s Rs507cr in 3QFY2015 (and V/s an expected Rs700cr). Sales growth was mainly driven by the international business, which posted a 248% yoy growth, while the Indian branded formulation business posted a 15% yoy growth. Consequently, on the operating front, the EBITDA margin came in at 41.7% V/s 20.1% in 3QFY2015 (and V/s an expected 27.5%). The same was aided by gross margin expansion, which came in at 77.6% V/s 65.6% in 3QFY2015. The R&D; expenditure during the quarter was 7.6% of sales V/s 6.0% of sales in 3QFY2015. Thus, the PAT came in at Rs269cr V/s Rs71cr in 3QFY2015 (and V/s an expected Rs160cr), a yoy growth of 281.4%. We maintain our Neutral rating on the stock considering fuller valuations. Results better than expectations: Alembic Pharma posted better-than-expected results for 3QFY2016. It posted an 81.8% yoy growth in sales for the quarter to Rs921cr V/s Rs507cr in 3QFY2015 (and V/s an expected Rs700cr). Sales growth was mainly driven by the international business, which posted a 248% yoy growth, while the Indian branded formulation business posted a 15%...

As Alembic books sales of Abilify with a one quarter lag, the impact of price erosion and loss of market share have not reflected in the 3QFY16 numbers. We estimate ~US$ 45mn Abilify revenues in 3Q. Staff costs are up 48% YoY and the new base is likely to be recurring. The company is also investing aggressively in R&D; (up 130% YoY).

In Q3FY16, total revenues of Alembic Pharmaceuticals increased by 80.1% YoY to Rs 9.2 bn (our estimates Rs 9.4 bn) compared to Rs 5.1 bn in Q3FY15, due to higher export formulations sales on account of revenues generated from Abilify opportunity.

The company was in the first wave, when it launched gAbilify through its partners. The price reduction of Althrocin has been more than compensated by gAbilify. We believe US and domestic formulations would continue to be company's key revenue and margin drivers.

For 2QFY2016, Alembic Pharmaceuticals (Alembic Pharma) posted numbers well ahead of our expectations. It posted an 84.5% yoy growth in sales to end the period at Rs1,008cr V/s Rs750cr expected. On the operating front, the OPM came in at 37.2% V/s 27.8% expected and V/s 19.5% in 2QFY2015. R&D; expenditure during the quarter was 9.4% of sales V/s 13.0% of sales in 2QFY2015. The net profit consequently came in at Rs289cr V/s Rs177.3cr expected and V/s Rs77.3cr in 2QFY2015, a yoy growth of 273.4%. We maintain our Neutral rating on the stock, considering the fuller valuations. Results better than expectations: For 2QFY2016, the company posted numbers well ahead of our expectations. It posted an 84.5% yoy growth in sales to end the period at Rs1,008cr V/s Rs750cr expected. This was primarily driven by gAbilifys launch in the US. Overall formulations were 84% of sales in 2QFY2016, with international generic accounting for 45% of sales and Indian branded accounting for 34% of sales. International generics (Rs559.3cr) posted a sales growth of 342% yoy. The Indian formulation branded sales (`2,846cr) posted a sales growth of 3.3% yoy. The API business posted a yoy growth of 43% yoy. On the operating front, the...

In Q2FY16, total revenues of Alembic Pharmaceuticals increased by 84.4% YoY to Rs 10.1 bn (our estimates Rs 10.8 bn) compared to Rs 5.5 bn in Q2FY15, due to higher export formulations sales on account of revenues generated from Abilify opportunity.

In Q1FY16, total revenues of Alembic Pharmaceuticals increased by 18% YoY to Rs 5.8 bn (our estimates Rs 5.5 bn) compared to Rs 4.9 bn in Q1FY15, due to higher export formulations sales. The Company's operating margins decreased by 210bps to 17.5% on back of lower gross margins and higher R&D cost.

In Q4FY15, total revenues of Alembic Pharmaceuticals increased by 8.4% YoY to Rs5.03 bn (our estimates Rs5.06 bn) compared to Rs4.64 bn in Q4FY14, due to higher domestic formulations sales. The Company's operating margins were at similar levels at 19.7% on back of higher other expenses which offset higher gross margins.