Alembic Pharmaceuticals Ltd. share price target

19 March 2019 Alembic Pharmaceuticals ALPMs capex investment has seen a significant increase from INR8.8b gross block in FY15 to INR11b over FY15-19E, which the company used to aggressively tap business opportunities in its key focus market, the US. But, due to its (a) track record of healthy launches, (b) ability to grab product-specific opportunities supported by a nimble supply chain, and (c) strong pipeline of products under development filings, ALPM remains confident of scaling the US business over the next 3-4 years. ALPM has about 190 projects under development Oral solids (~40-45%), Derma (~28%), and the remaining Onco-Injectables/general injectables. ALPM would be filing through the CB30 route to transfer a few products from its existing formulation unit at Panelav to a new unit at Jarod. ALPM has about 20 injectables (onco products) under development at its with exhibit batches planned in 2QFY20. It has about 20 Oral solids under development; exhibit batches have already commenced for a few products.

Maintain NEUTRAL with a TP of Rs 580 (18x Dec'20E EPS). This was the second consecutive quarter during which the US market experienced shortages in Sartans and other molecules. Benefitting from this, Alembic Pharma (ALPM) reported 21% YoY revenue growth. However, a sequential decline of 10% was due to lower Valsartan sales as compared to 2Q. EBITDA stood at Rs 2.4bn with margin at 23.8% (+147bps YoY). PAT at Rs 1.7bn was up 30%YoY.

Alembic Pharma's Q3FY19 results were better-than-expected on the profitability front whereas revenues were in line Revenues grew 21.2% YoY to | 1018.2 crore (I-direct estimate: | 1019.5 crore) on account of 44.1% YoY growth in the international business to | 448 crore (I-direct estimate: | 447.5 crore) led by sharp growth in ex-US businesses. Domestic formulations grew 4.6% to | 365 crore, came in line with I-direct estimates EBITDA margins improved 147 bps YoY to 23.8% (I-direct estimate:...

In Q3FY19, total revenues of Alembic Pharma increased by 21% YoY to Rs 10.2bn (below our estimates Rs 10.4 bn). The Company's operating margins increased from 22.3% to 23.8% YoY (our estimates 19.5%).

22 January 2019 Alembics 3QFY19 revenue shot up by ~21% YoY to INR10.2b (in line with est.), primarily led by the US business. Gross margin (GM) expanded by 260bp YoY due to superior product mix. EBITDA margin expanded by ~150bp YoY to 23.8%, primarily due to higher GM and lower R&D; expenses by ~70bp (as % of sales). This was partially off- set by higher employee expense by ~190bp (as % of sales). EBITDA grew by ~29% YoY to INR2.4b (v/s est. of INR2.2b), mainly led by healthy revenue growth and margin expansion. Interest expense stood at INR60m v/s INR8m YoY. PAT grew by ~30% YoY to INR1.7b (v/s est.

Revenues Outperform on shortage of Valsartan and Strong performance in non-regulated markets: In Q2FY19, total revenues of Alembic Pharma increased by 43% YoY to Rs 11.3bn (above our estimates Rs 9.7 bn). The Company's operating margins increased from 22.7% to 26.8% YoY (our estimates 19.3%). Its net profit increased by 65% YoY to Rs 2001 mn in Q2FY18 vis--vis our estimates of Rs 1225 mn.

Maintain NEUTRAL with a TP of Rs 610 (18x SEP20E EPS). Alembic Pharma (ALPM) reported buoyant numbers with revenue at Rs 11.3bn (+43% YoY), EBITDA margin at 26.8% (+413bps YoY) and PAT jumping to Rs 2bn (+65% YoY) in 2QFY19. This was largely driven by one-off Valsartan opportunity in the US market during this quarter. Adjusting for Valsartan, we believe revenues were up 16-18% YoY with Ex-US international business growing ~114% YoY and EBITDA margin was at 17-18%, affected by increased SG&A; cost and heightened R&D; in 2QFY19.

ICICI Securities Ltd | Retail Equity Research Alembic Pharma's Q2FY19 results were way above expectations on all front mainly due to one-off Valsartan (cardiovascular) opportunity in the US and 133% growth in the ex-US business to | 168 crore. This new ex-US base is likely to be sustainable, as per the management. Even ex one-off, US business grew 20%+ led by volume growth and price hike in select products Domestic formulations were flat owing to high base of re-stocking...

22 October 2018 2QFY19, primarily led by US business. Gross margin expanded 290bp YoY (+550bp QoQ) on account of a superior product mix. EBITDA margin expanded ~410bp YoY to 26.8%, primarily due to a higher gross margin and lower employee expenses (-400bp as % of sales), partially offset by higher INR1.6b), mainly led by strong revenue growth and margin expansion. Interest expense stood at INR58m v/s INR4m in the year-ago period. PAT sales/EBITDA/PAT grew 38%/62%/54% YoY to INR19.9b/ INR4.5b/INR2.9b. We expect 2HFY19 to be relatively soft as the base effect comes into play. International sales (52% of overall sales) grew robustly by ~124% YoY to INR5.9b, led by both non-US (+133% YoY) and US (+121% YoY, led one-time sales of Valsartan due to shortage) segments. API business grew ~9% YoY to INR1.6b.

Alembic Pharma's (Alembic) Q1FY19 results were below our expectation. Though, Revenue were in-line with our estimates (driven by strong growth in India (up 40.1% YoY) and Non-US (up 78.7% YoY), EBITDA margin slipped from 20.3% in Q4FY18 to 17.5% in the Q1FY19 given the increased expenses. EBITDA at Rs1.5bn was up 48.8% YoY however, down 12.8% QoQ. PAT was at Rs905mn (up 35.6% YoY; 27.1% below our est). Given higher operating costs post commissioning of new facilities, we have revised...