MOSL: ALEMBIC PHARMACEUTICALS (Neutral)-Operationally a mixed bag-concerns loom over rising opex
ALEMBIC PHARMACEUTICALS: Operationally a mixed bag; concerns loom over rising opex
(ALPM IN, Mkt Cap USD1.5b, CMP INR552, TP INR587, 6% Upside, Neutral)
- Strong API traction offset by India formulations weakness: Sales grew by a moderate 8.6% YoY to INR9.2b (in-line), with strong API sales (+16% YoY; 24% of sales) offset by the muted performances by the US (+8% YoY; 33% of sales) and India formulations (-1% YoY; 33% of sales) businesses.
- The contrasting gross and EBITDA margin movements: Gross margin improved 753bp YoY (+102bp QoQ) to 76.6%, driven by a better product mix. However, the EBITDA margin shrank 100bp YoY (-460bp QoQ) to 19.2% (our estimate: 19.7%), mainly due to higher employee cost (+322bp YoY, +217bp QoQ) and other operating expenses (+510bp YoY, +150bp QoQ). R&D spend stood at INR1.2b (13% of sales) in 4QFY19. Tax rate declined to 10% v/s 27% in the year-ago period. Thus, PAT increased 32% YoY to INR1.2b (our estimate: INR913m).
- FY19 performance: Sales/EBITDA/PAT grew 26%/36%/42% YoY to INR39.3b/INR8.7b/INR5.8b.
Alembic Pharmaceuticals Limited is a pharmaceutical company. The Company is engaged developing formulations and active pharmaceutical ingredients (API). The Company focuses on anti-infective, analgesic and, cough and cold therapies. It also focuses on therapies, such as cardiology, diabetes, gynecology, gastrointestinal, orthopedic, dermatology and ophthalmology. Its APIs include independent manufacturing blocks for Macrolides, non-steroidal anti-inflammatory drugs (NSAIDs) and other drugs. The Company offers international and domestic formulations. Under domestic formulation, it offers Branded Formulations and Generic formulations. Its domestic formulation include Roxid, Zofix, Althrocin, Tellzy AH, Revas H, Lactonic, Folinal, Gestofit, Glisen 1/2, Glimser 1/2, Veldrop, Azithral, Brinzemic and Neolap. Its generic formulations include Cetral, Ephedrex CD, Sicor, Worid, Alcephin, Alcizon, Baciclox, Comeba, Furobid, O Win Suspension, O win T, Silomag Gel, Pentab, Aginal AT and Pyremol.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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