Hold Alembic Pharma; target of Rs 1055: ICICI Direct

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ICICI Direct's research report on Alembic Pharma

Q3 results were a mixed bag. While operational performance was below Idirect estimates amid lower than expected International (mainly US) and API sales, net profit was higher due to higher-than-expected profit contribution from Rhizen Phama (one-off). Revenues grew 8.7% YoY to Rs 1314 crore led by strong growth in domestic, ROW formulations and API segment. US sales growth remained muted (down 0.6% YoY) at Rs 512 crore due to competition in Sartans. Domestic formulations grew 13.6% YoY to Rs 418 crore. EBITDA margins expanded 89 bps YoY to 27.8% due to better gross margins and lower R&D cost. Subsequently, EBITDA grew 12.3% YoY to Rs 365 crore. Net Profit grew 24.9% YoY to Rs 293 crore.

Outlook

We change from BUY to HOLD rating and arrive at a target price of Rs 1055 (vs. Rs 1170 earlier) based on 20x FY23E EPS of Rs 52.7.

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