Add Alembic Pharmaceuticals Ltd For Target Rs.800 - Yes Securities
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
US ramp up key to margin
Result Synopsis
US business clocked robust growth on back of buoyancy in existing business and moderate price erosion though muted India (actually flat YoY ex-animal health business) and higher opex due to full expensing of 3 facilities impacted margin. With some recovery in US, we would have expected better margin profile but for higher staff costs related to 3 new facilities. Management refrained from giving any margin/revenue guidance though it did reiterate gross margin in the range of 70%. H1 performance does not warrant any major change to growth estimates across US, India and other segments though we tweak operating costs which results in 3-8% cut in FY24/25 EPS estimates. Unless revenue picks up in US from the usual US$50-53mn range per quarter, it would be difficult for margin to move beyond 15-17% range. While we retain US$240mn revenue for US in FY25, it does depend on nature of general/onco injectable approvals (company has netted decent ophthalmic approval like Combigan) over next 2-3 quarters. Retain ADD with unchanged 22x PE for a revise TP Rs800 (earlier Rs840).
Result Highlights
Revenue up 8% YoY, in-line with expectation driven by India (+5% YoY) and robust 6% YoY rise in US
Domestic growth increasingly supported by animal health (+32% YoY to Rs940mn, 17% of India sales vs 13% in Q2 FY23)
Ex-animal health, domestic growth flat YoY; despite acute share at 30%, growth exanimal health appears underwhelming
US growth of 6% YoY and 14% QoQ supported by a benign pricing environment and potential gain in existing products
Margin flat QoQ and down 270bps YoY on higher opex – other expenses up 10% QoQ and 14% YoY
Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632
