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Alembic Pharma 3QFY2012 performance highlights and results update

Contributed by Angel Broking

Alembic Pharma (Alembic) reported a strong performance for 3QFY2012. The company’s growth was driven by the exports and domestic formulation business (which performed better than others), as restructuring of the business has now started showing results. Alembic reported robust sales growth and improvement in OPM during the quarter. At the CMP, the stock is trading at attractive valuations. Hence, we maintain our Buy view on the stock.

Results above estimates: Alembic reported strong revenue growth of 15.5% yoy to Rs.381cr, although the domestic formulation business grew by just 7.9%. However, the main growth driver was the exports segment, which grew by 50.4% yoy, driven by the API and formulations business. OPM for the quarter came in at 17.8% (15.3% in 2QFY2012). During the quarter, the company recorded net profit of Rs.44cr, primarily driven by revenue growth and expansion in OPM.

Outlook and valuation: Alembic’s growth and profitability profile has improved post the restructuring carried out by management. Over FY2011-13, we expect the company to post a CAGR of 15.4% and 34.8% in its sales and net profit, respectively. At the CMP, the stock is trading at attractive valuations. Hence, we maintain our Buy recommendation on the stock with a target price of Rs.82.