Alkem Laboratories Ltd's Q4FY18 consolidated net profit declines 51.58% yoy to Rs66.32cr : Misses Estimates

India Infoline Research Team | May 31, 2018 09:14 IST

The company’s consolidated revenue stood at Rs1,513.23cr, up 20.92% yoy but down 13.06% qoq.

Alkem Laboratories Ltd Q4FY18

Consolidated Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
Revenue 1,513.23 20.9
EBITDA 113.80 [23.8]
EBITDA Margin (%) 7.5 [441]
Net Profit (adjusted) 66.32 [51.6]
***EBITDA margin change is bps
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Reco. Price

1949

Last updated on

25-May-2018


Alkem Laboratories’ revenue in Q4FY18 grew by 20.9% yoy to Rs1,513.2cr. EBITDA declined by 23.8% yoy to Rs113.8cr from Rs149.3cr in Q4FY17. EBITDA margins in Q4FY18 were at 7.5% vs. 11.9% in Q4FY17 and 20.7% in Q3FY18. PAT declined by 51.6% to Rs66.3cr in Q4FY18 vs. Rs137cr in Q4FY17.
  • The revenue are ahead of the street estimates, while EBITDA and PAT are below the street estimates.
  • The main reason that the company has seen decline in the profitability was 33.7% yoy increase in the material cost and 30.7% yoy growth in the staff cost.
  • Other expenses for Q4FY18 include Rs28.3cr on account of net loss on fair valuation of current investments. Adjusted for this, EBITDA could have been Rs142.1cr.
  • In Q4FY18, the company has utilized its previously derecognised MAT credit of Rs21.8cr, hence current tax charge for Q4FY18 is after MAT credit
  • India sales grew by 12.1% yoy to Rs960.2cr. Company has continued to outperform the industry (grew by 11.1% in Q4FY18).
  • Company has maintained leading positions in established therapy areas of Anti-infective (rank 1), Gastro Intestinal (rank 3), Pain / Analgesic (rank 3).
  • In vitamins, Neuro/CNS, Cardiac and Anti-diabetic, Alkem continued to grow faster than industry and has gained market share in Q4FY18.
  • In derma, its rank has declined and has grown slightly slower than the industry in Q4FY18.
  • US sales for Q4FY18 grew by 40% yoy to Rs407.1cr.
  • Other international markets sales for Q4FY18 grew by 23.2% yoy to Rs Rs116.5cr.
  • R&D expenses for the quarter was at 7.4% of sales.
  • Company has filed a total of 108 ANDAs with the USFDA and has received 50 approvals to date. In Q4FY18 and FY18 the company filed 11 /19 ANDAs respectively.
  • Company has said they are satisfied with the growth of the company in a challenging year for the industry.
  • Alkem has sent its replies to the USFDA regarding form 483 at its Daman and St. Louis facilities.
Concall highlights
  • Company has sent the monthly update on Daman plant (1/3rd of US sales, 50% of pending ANDAs) to the USFDA. Management has said that there are less than 6 repeat observations and Alkem has reasonable chance of coming out of this.
  • USFDA inspection at Baddi is due at any time.
  • Expects mid teen growth in the domestic business over capacity expansions, higher MR productivity, especially in chronic and addition of 1,000 people in its sales force.
  • US business margin performance has been weak due to pricing headwinds/API price hikes. No competition expected in Mycophenolate in FY19E and company expects high single digit ANDA approvals in FY19E.
  • The margins were low in the quarter due to higher contribution of low margin international business, reduction of net realization due to GST, and API price hikes.
  • In FY19E, management expects 0.5%-1% reduction in the gross margin but expects to plug this by cost reductions.
  • During the quarter, there was net Rs28cr write-off on the real estate, which is now valued at Rs225cr.
  • Management expects to maintain FY19E EBITDA margins around the level of FY18.
  • Capex for FY18 was Rs675cr and that for FY19E is expected to be Rs550cr-Rs600cr, while tax rate is expected to be 18-20% for FY19E.
  • Company has no buyback plans and it will continue to pay 20-25% of PAT as dividend.

Technical View:

Alkem Laboratories Ltd is currently trading at Rs. 1,976.80, down by 57.75 points or 2.84% from its previous closing of Rs. 2,034.55 on the BSE.
The scrip opened at Rs. 2,050 and has touched a high and low of Rs. 2,054.65 and Rs. 1,929.80 respectively. So far 1,14,368 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.


***Note: This is a NSE Chart

 

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