Alkem Laboratories Ltd's Q2FY19 consolidated net profit declines 20.64% yoy to Rs254.5cr: In-line with Estimates

The company’s consolidated revenue in the period stood at Rs1,918.92cr, up 3.22% yoy and 15.66% qoq.

Nov 02, 2018 03:11 IST India Infoline Research Team

Alkem Laboratories Ltd Q2FY19

Consolidated Results Q2FY19: (in Rs cr)

Q2FY19 YoY (%)
Revenue 1,918.92 3.2
EBITDA 364.17 [19.9]
EBITDA Margin (%) 19 [547]
Net Profit (adjusted) 254.50 [20.6]
***EBITDA margin change is bps
Alkem Lab’s revenue in Q2FY19 grew 3.2% yoy to Rs1,918.9cr. While Alkem India revenue declined 6.2% yoy due to a high base effect, the US revenue grew 55.3% yoy. EBITDA, meanwhile, declined 19.9% yoy to Rs364.2cr in Q2FY19 vs. Rs454.5cr in Q2FY18. EBITDA margins declined 547bps yoy and stood at 19% in Q2FY19 vs. 12.3% in Q1FY19 and 24.4% in Q2FY18. PAT declined 20.6% yoy to Rs254.5cr in Q2FY19 vs. Rs320.7cr in Q2FY18. We had expected revenue/EBITDA/PAT of Rs1,744cr/Rs349cr/Rs271cr, respectively, hence revenue and EBITDA have beat our estimates. However, PAT missed our estimates slightly. Overall, we see operating improvement in Q2FY19, and hence, the result is in-line with estimates.

Other highlights
  • Gross margin in Q2FY19 stood at 60.2% vs. 59.9% in Q1FY19 and 61.9% in Q2FY18.
  • In Q2FY19, Alkem's India sales declined 6.2% yoy to Rs1,318.4cr vs. Rs1,405.6cr in Q2FY18. The decline is due to the high base created by re-stocking in Q2FY18.
  • As per IQVIA MAT September 2018, Alkem's secondary sales in Q2FY19 grew 18.2% yoy, vs. Indian Pharmaceutical Market (IPM) growth of 13.3% yoy.
  • Also, Alkem's secondary sales for H1FY19 grew 16.4% yoy, while IPM in the period grew 12.1% yoy.
  • US sales for Q2FY19 grew 55.3% yoy to Rs472.5cr. For H1FY19, US sales grew 149.3% yoy to Rs896.2cr.
  • Growth in the US business was driven by a combination of new product launches, market share gains in the existing products, and rupee depreciation.
  • In Q2FY19, the company filed seven ANDAs with the USFDA and received two approvals (including one tentative approval). Cumulatively, it has filed a total of 118 ANDAs and has 53 approvals.
  • Other international markets' sales for the quarter declined 19.3% yoy to Rs108.4cr, while for H1FY19, it declined 4.6% yoy to Rs232.6cr.
  • Company's R&D expenses for the quarter was Rs104.9cr, 5.5% of revenue from operations.
  • St. Louis (USA) facility has one outstanding observation, while all other facilities have been cleared by the USFDA.

Technical View:

Alkem Laboratories Ltd ended at Rs1,908.90, up 6.7 points, or 0.35%, from its previous close of Rs1,902.20 on the BSE. The scrip opened at Rs1,923 and touched a high and low of Rs1,931.70 and Rs1,863, respectively. A total of 66,174 (NSE+BSE) shares were traded on the counter. The stock traded above its 50-DMA.

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