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Alembic Pharmaceuticals Ltd.(APL) | Q4FY13 Result & Concall




IndiaNivesh Securities Pvt Ltd


03 May 2013





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Alembic Pharmaceuticals Ltd. (APL) Ahead of estimates on all fronts Favorable product mix led to healthy profitability: APL’s Q4FY13 revenue was marginally above estimates & grew 10.5% y-o-y (2.1% q-o-q) to Rs 3.77 billion (V/s INSPL estimates = Rs 3.75 billion) in Q4FY13 on the back of 54% y-o-y growth from International generics business linked with Desvenlafaxine supply to US market along with its partner Ranbaxy at the end of March 2013 & partial commencement of new formulation facility. APL’s domestic formulation business grew 12.5% y-o-y on the back of healthy growth in specialty business partially offset by slow growth of only 3% y-o-y in anti-infective, cold & cough segment. Overall growth was partially offset by 11% y-o-y decline in API business. Valuation: At CMP of Rs 122, the stock is trading at P/E multiple of 11.1x of FY14E & 9 x of FY15E earnings estimates. We have recommend buy on the stock at prevailing price of Rs 49 in our “initiating coverage report released on 7th June 2012” with the target price of Rs 79 & further updated to Rs 109, which has been achieved. Anticipating full fledged commencement of new formulation facility, ~140 bps expansion in EBITDA margins by FY15E, ~30% y-o-y growth from international regulated market, ~15%CAGR in domestic formulation business, we continue to maintain positive view on the stock. Further, we believe that Desvenlafaxine ramp up going forward would be another trigger foir the stock in the short term. Hence, near time expansion in valuation can’t be ruled out. We value company at 12x of FY15E earnings estimates & upgrade target price to Rs 163, which has 32% upside from current level. Hence we maintain BUY on the stock.

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