Buy Alembic Pharma; target of Rs 266: Sushil Finance

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26 Aug, 2025 12:21

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Sushil Finance's report on Alembic Pharmaceuticals

"On the domestic formulations front, Alembic Pharmaceuticals is consistently recording strong growth backed by increasing contribution from its chronic portfolio. On the international front, increased R&D spend, increased product launches in the US market going ahead coupled with increasing exposure to other markets is expected to pay rich dividends to the company. We are thereby upgrading our estimates factoring in till date exponential growth in international generics business, consistent growth with greater focus on chronic space in the domestic business & earlier than expected improvement in EBIDTA margin. We are also introducing & rolling forward our TP to FY16E numbers."

"We believe margins will expand by ~70 bps in FY15E however with the company looking at creating a front end presence in FY16E; we are factoring in a cost pressure in FY16E numbers. Even though we expect the high growth numbers in the international business to taper down on the back of higher base kicking in, we continue to have a bullish stance on the stock citing consistent performance, strong return ratios, robust cash flows (CFO - FY15E: Rs.2716 mn, FY16E: Rs.3364 mn), low debt profile and expanding margins going forward. We recommend investors to BUY the stock on dips with a target price (TP) to Rs 266 based on 14x FY16E EPS of Rs 19," says Sushil Finance research report.

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