Alembic Pharma’s (Alembic) Q2FY26 result beat our expectations – led by formulations exports (up 25.1% YoY) while India continued to grow at a modest pace (4.9% in Q2FY26). New launches, including gEntresto, drove strong 21% YoY growth in its US business, and the launch of 8–10 products in H2FY26 should enable the momentum to sustain. Management is hopeful of a recovery in its India business in H2FY26, as the decline in its largest product, Azithral, is arrested. Alembic is entering US’ specialty segment via the acquisition of Utility Therapeutics; it shall launch Pivya (pivmecillinam), an anti-bacterial drug, in Q1FY27. Management aims to achieve near-term/medium-term EBITDA margins of 18%/20%.
OutlookWe raise our FY26–27E EPS by ~2–6% to bake in better margins. Maintain HOLD with a higher TP of INR 960 based on 22x FY27E EPS.
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