MOSL: ALKEM LABORATORIES (Neutral)-Strong numbers-operating leverage impact visible
​Alkem Laboratories: Strong numbers; operating leverage impact visible
(ALKEM IN, Mkt Cap USD3.6b, CMP INR1937, TP INR1950, 1% Upside, Neutral)
- Revenue increased ~14% YoY to INR18.6b (8% beat; adjusted for GST, revenue growth stands at ~20%). EBITDA rose 48% YoY to INR4.6b (48% beat), with the margin at ~24.7% (+570bp YoY and 1740bp QoQ), as other expense declined ~500bp YoY (as % of sales). R&D expense stood at INR901m (4.8% of sales). PAT increased ~13% YoY to INR3.2b (29% beat).
- Strong domestic business growth; expect better growth in 2H: Alkem's domestic business grew robustly by 15% YoY to INR14.1b, led by channel refilling post GST. The company is expanding its presence in the domestic business via new product launches and expanding into new therapies. Alkem maintained its guidance for mid-teens growth in FY18; with channel refilling post GST, it is confident to achieve this target. Inventory levels are at ~30 days post GST, up from 17 days in 1QFY18; the company expects this to improve, going forward.
- Key launches to drive US business: US sales came in at USD47.5m. We expect ramp-up in the US business in the coming quarters, led by the expected launch of 8-10 products in FY18. Also, 2H is expected to improve on the back of seasonally strong quarter for Benzonatate and the launch of Nexium/Prasugrel.
Alkem Laboratories Limited is a pharmaceutical company. The Company is engaged in the development, manufacture and sale of pharmaceutical and neutraceutical products. The Company operates through two segments: pharmaceutical and investing. The Company produces generics, generic drugs, active pharmaceutical ingredients (APIs) and neutraceuticals, which it markets in India and approximately 50 countries internationally, primarily the United States. The Company offers various products, such as CLAVAM 375, CLAVAM BID DRY SYRUP, CLAVAM INJ 300MG, FREEAIR NASAL SPRAY, PAN 40MG INJECTION (VIAL), PAN/40MG TABLETS, PROWEL DRY SYRUP (30ML), TAXCLAV 100 DT TABLETS, SATROGYL O DRY SYRUP, XONE/500MG VAIL, MEROSURE KIT 500, MEROSURE 500 MG and ZADONASE, among others. The Company has approximately 16 manufacturing facilities, of which 14 manufacturing facilities are at geographically diversified locations in India and two in the United States.
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.
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