Buy Alembic Pharmaceutical; target of Rs 1,132: Deven Choksey

Deven Choksey's research report on Alembic Pharmaceutical

Consolidated revenue increased by 11.7% QoQ and 15.9% YoY to INR 19,102 Mn, ahead of our estimates (+5.9%). Growth was driven by sustained momentum in the US generics and Ex-US segments, partially offset by moderate growth in the domestic formulations and API businesses. Strong base business recovery and new launches in the US contributed meaningfully to the topline beat.

Outlook

Alembic Pharma is expected to maintain steady growth momentum supported by its expanding complex generics portfolio in the US, sustained traction in Ex-US markets, and a gradual recovery in the domestic formulations business. Margin improvement is likely to continue, driven by higher plant utilization, operational efficiency, and a favorable product mix. The company’s consistent R&D investments and prudent cost management are expected to strengthen its earnings visibility and enhance return ratios over the medium term. We have rolled forward our valuation to Sept’27 estimates. We value Alembic Pharma at 22.0x Sept’27 EPS, implying a target price of INR 1,132. We upgrade our rating from ACCUMULATE to “BUY”, reflecting improved earnings visibility, a structurally stronger margin profile, and sustained growth across key geographies.