KR Choksey is bullish on Alembic Pharmaceuticals has recommended buy rating on the stock with a target price of Rs 1286 in its research report dated October 26, 2020.
KR Choksey's research report on Alembic Pharmaceuticals
For the quarter, Alembic Pharma reported strong Revenue growth of 17.4% YoY (up 8.6% QoQ) led by strong growth in the ROW market and the API segment. EBITDA grew 28.3% YoY (up 8.9% QoQ). EBITDA margin expanded to 30.4% in Q2FY21 (from 27.8% last year). Net Profit rose 35.4% YoY (up 10.6% QoQ) while Net Profit Margin for the quarter expanded 303 bps YoY to 22.9% (up 40 bps QoQ) from 19.8% in Q2FY20. The company invested INR 1.68 bn in capex in Q2FY21 (vs INR 1.97 bn in Q2FY20). R&D expense for the quarter stood at INR 1.85 bn (12.7% of revenue) vs INR 1.74 bn (14% of revenue in Q2FY20).
Shares of Alembic Pharma are currently trading at a P/E of 17.5x/17.6x on FY21E/22E earnings. We continue to apply P/E multiple to 23.5x on FY22E EPS of INR 54.7/share & raise our target price to INR 1,286/share; an upside potential of 34.0%. Accordingly, we reiterate a “BUY” rating on the shares of Alembic Pharma.
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