Buy Alembic Pharmaceuticals, target price Rs 907: HDFC Securities
Alembic Pharmaceuticals Ltd., incorporated in the year 2010, is a Mid Cap company (having a market cap of Rs 15778.12 Crore) operating in Pharmaceuticals sector.
By ETMarkets.com | Updated:
Agencies
HDFC Securities has buy call on Alembic Pharma with a target price of Rs 907. The current market price of Alembic Pharmaceuticals is Rs 791.7. Time period given by analyst is six months when Alembic Pharmaceuticals Ltd. price can reach defined target.
Alembic Pharmaceuticals Ltd., incorporated in the year 2010, is a Mid Cap company (having a market cap of Rs 15778.12 Crore) operating in Pharmaceuticals sector.
Alembic Pharmaceuticals Ltd. key Products/Revenue Segments include Pharmaceuticals, Export Incentives, Royalty Income and Other Operating Revenue for the year ending 31-Mar-2021.
Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 1294.52 Crore, down -2.51 % from last quarter Total Income of Rs 1327.91 Crore and down -11.35 % from last year same quarter Total Income of Rs 1460.32 Crore. Company has reported net profit after tax of Rs 160.73 Crore in latest quarter.
Investment Rationale
Alembic Pharma has concluded a large capex program where in it has invested around Rs 600-700cr per year over FY18-21. Management has stated that post the conclusion of the program, it would be in a position to offer enhanced new dosages. The focus will be to ramp up filings across the ophthalmology, general injectables, oncology injectables and oral solids, with an emphasis on strengthening capacities and growing product portfolio. The brokerage estimates 14.5% revenue CAGR over FY22-24E on the back of strong growth across its focused markets. It estimates 370bps expansion in operating margin over FY22-24E led by better gross margin and operational efficiency. Going forward, lower capex intensity post is likely to further reduce debt and improve Alembic’s free cash flow generation and return ratios. Domestic and international generics business is well poised to register strong growth, with the management eyeing US$ 400mn sales from US by FY25. At CMP, the stock is trading at 17x/13x its FY23E/FY24E EPS, which is at a discount to most of the peers.
Promoter/FII Holdings
Promoters held 69.48 per cent stake in the company as of 31-Dec-2021, while FIIs owned 5.89 per cent, DIIs 11.6 per cent.
Alembic Pharmaceuticals Ltd., incorporated in the year 2010, is a Mid Cap company (having a market cap of Rs 15778.12 Crore) operating in Pharmaceuticals sector.
Alembic Pharmaceuticals Ltd. key Products/Revenue Segments include Pharmaceuticals, Export Incentives, Royalty Income and Other Operating Revenue for the year ending 31-Mar-2021.
Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 1294.52 Crore, down -2.51 % from last quarter Total Income of Rs 1327.91 Crore and down -11.35 % from last year same quarter Total Income of Rs 1460.32 Crore. Company has reported net profit after tax of Rs 160.73 Crore in latest quarter.
Investment Rationale
Alembic Pharma has concluded a large capex program where in it has invested around Rs 600-700cr per year over FY18-21. Management has stated that post the conclusion of the program, it would be in a position to offer enhanced new dosages. The focus will be to ramp up filings across the ophthalmology, general injectables, oncology injectables and oral solids, with an emphasis on strengthening capacities and growing product portfolio. The brokerage estimates 14.5% revenue CAGR over FY22-24E on the back of strong growth across its focused markets. It estimates 370bps expansion in operating margin over FY22-24E led by better gross margin and operational efficiency. Going forward, lower capex intensity post is likely to further reduce debt and improve Alembic’s free cash flow generation and return ratios. Domestic and international generics business is well poised to register strong growth, with the management eyeing US$ 400mn sales from US by FY25. At CMP, the stock is trading at 17x/13x its FY23E/FY24E EPS, which is at a discount to most of the peers.
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Promoter/FII Holdings
Promoters held 69.48 per cent stake in the company as of 31-Dec-2021, while FIIs owned 5.89 per cent, DIIs 11.6 per cent.
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