Hold Alembic Pharmaceuticals; target of Rs 778: 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 11.3% YoY (-2.5% QoQ) decline in the total revenue to INR 12.92 bn as its US generic formulation segment’s revenue (27% of total revenue) fell by 40.2% YoY (-5.7% QoQ) due to increased competitive intensity witnessed in the US. On the other hand, India market (39% of total revenue) posted strong growth (+22.7% YoY/+5.8% QoQ) in revenue, driven by faster growth in acute and specialty segments than the growth in India pharma market (IPM). Heightened competitive intensity in the US, flat growth (both YoY and QoQ) in Ex-USA revenue (15% of total revenue), and decline (9.1% YoY/14.3% QoQ) in API revenue (18% of total revenue) led to EBITDA decline of 42.0% YoY (+9.0% QOQ) in Q2FY22 and adjusted PAT decline of 49.2% YoY (+2.9% QoQ) to INR 1.69 bn in Q2FY22.

Outlook

We slightly upgrade our valuation multiple to 18.5x from 17.7x earlier (historically the company has traded at an average forward PEs in the range of 18.0x-20.2x over the last 5 years) on revised FY23E EPS of INR 42.1 (vs. earlier 45.3/share) and reduce our target price (TP) to INR 778/share (earlier INR 801/share). Since the new TP indicates a potential upside of 1% from its CMP of INR 769, we maintain our “HOLD” rating on the shares of Alembic Pharma.

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