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IDBI Capital
Alembic Pharma (Reduce)
CMP: ₹286.10
Target: ₹272
Alembic Q4FY14 result came in line with our expectation where revenue increased 23 per cent y-o-y to ₹460 crore (IDBI estimate ₹470 crore) on the back of strong US sales and domestic chronic sales, partially offset by disappointing domestic acute and active pharmaceutical ingredient sales. Operating profit margin expanded 229 bps y-o-y to 19.7 per cent in Q4FY14 (IDBI estimate 19.5 per cent) primarily owing to lower raw material expenses. The company’s net profit grew 40.4 per cent y-o-y to ₹61.30 core in Q4FY14 (IDBI estimate ₹60.1 crore) due to better operational performance and higher other income. We value Alembic at 14x on our FY16E EPS of ₹19.5. We continue to remain positive on the company’s growth outlook over medium- to long-term. However, with the sharp run up in the company’s valuation, we downgrade our recommendation to ‘Reduce’.
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