ICICI Direct recommended hold rating on Alembic Pharma with a target price of Rs 560 in its research report dated May 09, 2019.
ICICI Direct's research report on Alembic Pharma
Q4FY19 revenues grew 8.6% YoY to Rs 927 crore (I-direct estimate: Rs 1028.1 crore) on account of 32.3% YoY growth in RoW markets to Rs 82 crore (I-direct estimate: Rs 139.5 crore) and 16.2% YoY growth in API segment to Rs 230 crore (I-direct estimate: Rs 207.9 crore). While domestic formulations de-grew 0.7% YoY to Rs 302 crore (I-direct estimate: Rs 340.2 crore), US formulations grew 7.9% YoY to Rs 313 crore (I-direct estimate: Rs 314.5 crore). EBITDA margins contracted 109 bps YoY to 19.2% (I-direct estimate: 21.9%) mainly due higher other expenditure. EBITDA grew mere 2.8% YoY to Rs 178 crore vis-à-vis I-direct estimate of Rs 224.8 crore. Net profit grew 39.2% YoY to Rs 130.6 crore (I-direct estimate of Rs 157.6 crore). Delta vis-à-vis EBITDA was mainly due to lower tax rate (14.9% vs. 38.5% in Q4FY18).
The benefits are most likely to be back-loaded. Immediate cash burn is likely to weigh on sentiments in the near term. We arrive at our target price of Rs 560 based on 22x FY21E EPS of Rs 25.4.
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