Alembic Pharmaceuticals Ltd. share price target

Alembic Pharma (ALPM)'s 4QFY21 operational performance was marginally below estimates, largely due to lower traction in US / Domestic Formulation (DF) sales. ALPM awaits feedback from the USFDA on the resolution of observations at the recently inspected injectables Unit (F3). We tweak our estimates for FY22/FY23, factoring in a) a slowdown in US sales and b) lower expensing of operational cost related to newer facilities. We continue to value ALPM at 19x 12M forward earnings to arrive at TP of INR1,070. We maintain Neutral on a limited upside from current levels....

We maintain BUY on Alembic Pharmaceuticals Ltd (ALPM') and increase our March FY22 TP to INR 1,480 (from INR 1,475 on modeling changes) thus an upside of 47% over the CMP. Q4FY21 results were on expected lines. Subdued US performance was on the back of headwinds coming from Sartans pricing erosion, which is likely to continue in the medium term. RoW business was a pleasant surprise on the back of low base post serialisation. Domestic continues to underperform due to Covid related headwinds; Specialty to lead the FY22 growth. Key medium term trigger would be USFDA's EIR for the general injectable plant which has already been audited by the USFDA on Feb-2021, deemed mission critical. Using DCF, we value Umbralisib at INR 160 per share discounting these sources of revenues including milestone based payments and CMP revenues over Umbralisibs commercial life. ALPM is currently trading at ~12x / ~9.6x EV / EBITDAx for FY22E / FY23E....

Q3 results were a mixed bag. While operational performance was below Idirect 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 | 1314 crore led by strong growth in domestic, ROW formulations and API segment. US sales growth remained muted (down 0.6% YoY) at | 512 crore due to competition in Sartans. Domestic formulations grew 13.6% YoY to | 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 |...

We lower our PAT estimate by 3%/4% for FY22/FY23, factoring in higher competition for Sartans and delay in approvals for injectable products. We continue to value ALPM at 19x (in line with its five-year average) 12M forward earnings to arrive at TP of INR1,070. Maintain Neutral....

Alembic Pharma (ALPM) reported a 12% EBITDA miss due to weak sales.

Alembic Pharma (ALPM) reported a 12% EBITDA beat, with strong growth in ROW, API and India while US sales were in line.

Domestic sales comprise 31% of FY20 revenues with higher contribution from specialty (54% of domestic sales). However, despite having an established set-up, growth (FY16-20 CAGR of ~5%) has lagged the industry growth curve. Alembic is consciously focusing on this aspect by overhauling distribution channels (defocusing on trade generics). Overall, we expect...

Valuation and Risks: We upgrade our revenues by 3.2% / 3.3% for FY21E/FY22E at Rs 52 bn / Rs 56 bn respectively due to upgrade in US, ROW and API business.