Hold Alembic Pharmaceuticals; target of Rs 758: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on Alembic Pharmaceuticals

Alembic Pharma reported 10.6% YoY (+11.3% QoQ) rise in total operating revenue to INR 14.16 bn in Q4FY22, as US revenue grew at 17.3% YoY (+41.7% QoQ), breaking the consecutive quarterly declining trend in the segment that ensued since Q3FY21. The company witnessed 1,538 bps YoY (-880 bps QoQ) fall in EBITDA margin to 11.3% in Q4FY22, due to one-time costs associated with acquisition of Aleor Dermaceuticals. The reported PAT declined 85.9% YoY (-79.9% QoQ) to INR 355 mn for the quarter. Without the Aleor related onetime expenses, the company would have posted a 28.0% YoY decline (+2.3% QoQ) in net income to INR 1,805 mn in Q4FY22. The company launched 1 product in Q4FY22 and 13 in FY22, in the US.

Outlook

The company’s shares have been flat since our last earnings update in Feb 22 and are currently trading at 21.0x/16.1x/14.8x its FY23E/FY24E/FY25E EPS estimates, respectively. Using DCF method and applying 16.4x valuation multiple on FY24E EPS of INR 45.5 (earlier INR 47.4), we arrive at the same target price (TP) of INR 758/share. Since the TP indicate a potential 3.0% upside from its CMP of INR 734, we maintain our “HOLD” recommendation on the shares of Alembic Pharma.

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