Alembic Pharma reported a largely in line quarter with YoY revenue and EBIDTA growth of 15.7% and ~35% respectively
India branded business grew 16.3% yoy vs estimated 15% yoy; specialty segment sales increased 25% yoy
International generics revenues lower than expected at +33% yoy; company filed 3 ANDAs taking total ANDAs filings to 64 while approval for 3 ANDA proposals received during the quarter
Margins declined 12bps qoq on higher marketing expense but rose ~280bps yoy
PAT mostly in line with our forecast; retain previous estimates and 2-yr target price of Rs550 on robust branded domestic business and international generics outlook
|(Rs m)||Q1 FY15||Q4 FY14||% qoq||Q1 FY14||% yoy|
|RM & packing||(1,205)||(1,350)||(10.7)||(1,229)||(2.0)|
|Purch of traded goods||(565)||(413)||36.8||(495)||14.1|
|OPM (%)||19.6||19.7||(12) bps||16.7||282 bps|
|Effective tax rate (%)||23.7||24.1||(43) bps||22.9||79 bps|
|Adj. PAT margin (%)||13.2||13.2||1 bps||10.9||230 bps|
|Extra ordinary items||(7)||-||-||-||-|
Alembic reports largely in line quarter
Alembic pharma posted YoY revenue growth of 15.7% at Rs4.9bn vs our estimate of ~Rs5bn driven by healthy rise in India branded business (+16.3% yoy vs est. 15% yoy) and International generics (+33% yoy). Revenues from international generics business were lower than expected as company reduced sales from low margin business (~contract manufacturing types) to focus on high margin products and also due to some impact from pricing adjustments. Company indicated in its post earnings call that new product launches would be reflected in sales from Q3 onwards. Share of specialty segment at 59% of domestic branded business.
EBIDTA margin dips qoq on higher marketing spends
Q1 EBIDTA margin up ~280bps yoy but declined marginally on qoq basis as marketing spends (+386bps qoq) for branded segment increased due to launch of new divisions. Company mentioned that once critical mass is reached in such areas (at least 2 quarters away), the impact would be mitigated. Also staff costs rose 210bps yoy and 83bps qoq driven by addition to field force of 400 people (all in Specialty segment) due to additions of new divisions.
|Segment (Rs mn)||Q1 FY15||Q1 FY14||% yoy|
Retain BUY on robust domestic branded and int’l generics outlook
Alembic has filed 3 ANDAs during the quarter taking cumulative ANDA filings to 64 while it also got 3 ANDA approvals taking cumulative ANDA/NDA approvals to 35 (including 5 tentative approvals). We expect domestic branded business to post high teens growth while international generics too would continue to compound at a robust run rate. Company reiterated its FY15 capex guidance of Rs2.5bn which indicates strong revenue visibility in FY16 and beyond. We stick to our FY15/16/17 estimates and retain BUY with unchanged 2-yr target of Rs550.
|Y/e 31 Mar (Rs m)||FY14||FY15E||FY16E||FY17E|
|yoy growth (%)||22.6||19.3||21.5||22.3|
|yoy growth (%)||42.5||18.0||29.8||31.2|