MOSL: ALEMBIC PHARMACEUTICALS (Neutral)-Weak results-investment pay-off still some time away
​Alembic Pharmaceuticals: Weak results; investment pay-off still some time away
(ALPM IN, Mkt Cap USD1.8b, CMP INR606, TP INR640, 6% Upside, Neutral)
- 4Q results below estimates: Sales increased 17.8% YoY (-4% QoQ) to INR7.4b (~7% below est.) due to muted growth in India business and lower-than-expected growth in international formulations segment. EBITDA margin contracted ~70bp QoQ to 18% due to high R&D expense (15% of sales). PAT of INR930m was flat YoY and increased 8% QoQ (missed estimate due to weak operating profit, partially offset by a lower tax rate of ~14%).
- Domestic business to revive in FY18; approval rate in US to improve: Domestic business delivered muted growth of 2.9% YoY, impacted by demonetization and NLEM-related price control (~INR70-80m impact). ALPM, however, expects growth to bounce back to low teens. International business sales fell 10% QoQ due to competition in Abilify and limited new launches (four launches in FY17). ANDA filing rate increased significantly, with 10 filings in 4Q v/s 10 in 9MFY17 and historical run-rate of 6-8 filings. It expects to launch 8-10 new ANDAs in FY18, which should help offset the Abilify impact.
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.
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