IGI Logo

Our view

Alembic has withdrawn its FY22 guidance of Rs50 EPS which was reiterated in Q4 FY21. More than the sharp fall in US, what has led to the withdrawal is the uncertainty around US business which has seen severe, and probably unexpected, price erosion in the ex‐sartans business. We forecast US business to clock US$230mn revenues, down from US$280mn in FY22 with corresponding cut to FY23 estimate though FY24 remains largely unchanged. A single quarter of US reversal does not preempt the case for optimism on FY24 performance. This is the key reason for not cutting target 25x PE on FY23 (even as we await filings from new facilities) though we have taken the axe to FY22/23 estimates by 22%/15%. Retain BUY with revised TP Rs1,100, based on 25x FY23 EPS. If US sales recover beyond US$60mn/quarter run rate in FY22, it would be an additional upside not factored in our estimate. BUY stays with TP Rs1,100 (from Rs1,280 earlier) with TP lowered to factor the disappointment in Q1 and resultant cut in estimates.

Result Highlights

* Sharp US decline mainly driven by price erosion across the board including the most in Sartans

* Domestic business rebounds partly on low base of last year but also from Azithromycin led boost; rest of the portfolio performed fairly well too

* No let up in R&D at Rs6.7bn in FY22; one quarter reversal in US sales does not temper the optimism around FY24 build up to US business driven by filings from new facilities    

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

Above views are of the author and not of the website kindly read disclaimer