Neutral on Alembic Pharmaceuticals, target price Rs 750: Motilal Oswal Financial Services
Alembic Pharma delivered a better than expected operational performance, led by better-than-industry growth in the Domestic Formulations (DF) segment and a one-time opportunity in US Generics.
By ETMarkets.com | Updated:
Agencies
Motilal Oswal Financial Services has neutral call on Alembic Pharmaceuticals with a target price of Rs 750. The current market price of Alembic Pharmaceuticals is Rs 731.9.
Alembic Pharmaceuticals, incorporated in the year 2010, is a Mid Cap company (having a market cap of Rs 15461.66 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 31-12-2021, the company has reported a Consolidated Total Income of Rs 1273.04 crore, down -1.66% from last quarter total Income of Rs 1294.52 crore, and down -3.33 % from last year same quarter Total Income of Rs 1316.86 crore. Company has reported net profit after tax of Rs 164.25 Crore in latest quarter.
Investment Rationale
Alembic Pharma delivered a better than expected operational performance, led by better-than-industry growth in the Domestic Formulations (DF) segment and a one-time opportunity in US Generics. Resolution of issues at Karkhadi (F3) and positive USFDA inspection of its Injectable unit at Panelav remains key for better growth prospects.
"The gestation period to receive USFDA compliance for its Injectable sites continues to rise, affecting its overall return on investment. The ongoing price erosion in the US and cost pressures at the industry level further suppresses the outlook. Under these circumstances, current valuation adequately factors in the earnings upside over the next two years. We maintain our Neutral rating," the brokerage said.
Promoter/FII Holdings
Promoters held 69.61 per cent stake in the company as of 31-Mar-2022, while FIIs owned 6.02 per cent, DIIs 11.74 per cent.
Alembic Pharmaceuticals, incorporated in the year 2010, is a Mid Cap company (having a market cap of Rs 15461.66 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 31-12-2021, the company has reported a Consolidated Total Income of Rs 1273.04 crore, down -1.66% from last quarter total Income of Rs 1294.52 crore, and down -3.33 % from last year same quarter Total Income of Rs 1316.86 crore. Company has reported net profit after tax of Rs 164.25 Crore in latest quarter.
Investment Rationale
Alembic Pharma delivered a better than expected operational performance, led by better-than-industry growth in the Domestic Formulations (DF) segment and a one-time opportunity in US Generics. Resolution of issues at Karkhadi (F3) and positive USFDA inspection of its Injectable unit at Panelav remains key for better growth prospects.
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MOSL has cut FY23/FY24 earnings estimate by ~9% each to factor in: a) prolonged time required to secure USFDA compliance for its Injectables plants, b) higher RM and supply chain cost, and c) higher OPEX on ALEOR becoming a wholly-owned subsidiary. It values Alembic Pharma at 18x 12-months forward earnings to arrive at our TP of Rs 750."The gestation period to receive USFDA compliance for its Injectable sites continues to rise, affecting its overall return on investment. The ongoing price erosion in the US and cost pressures at the industry level further suppresses the outlook. Under these circumstances, current valuation adequately factors in the earnings upside over the next two years. We maintain our Neutral rating," the brokerage said.
Promoter/FII Holdings
Promoters held 69.61 per cent stake in the company as of 31-Mar-2022, while FIIs owned 6.02 per cent, DIIs 11.74 per cent.
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