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Narnolia Financial
Alembic Pharma (Buy)
CMP: ₹543
Target: ₹632
Alembic Pharmaceutical’s (APL) revenue for the year grew by 26 per cent y-o-y to ₹3,935 crore mainly driven by strong growth in the international business. The US business saw robust growth on account of valsartan opportunity in Q2 and Q3 of FY19. ROW business got a boost from the AOK tender win this year though sales in Q4FY19 was partly impacted by serialisation in Europe.
Going forward, we expect APL to report 14 per cent y-o-y revenue growth in FY20 mainly driven by increased product launches in the US market; also the growth is expected to be supported from other geographies as well. Though on the margin front, we expect the margins to remain be under pressure in the short run as the company starts taking the exhibit batches from these three new plants from Q1FY20.
We expect to see traction in revenues from FY21 onwards as the new plants start commercial production. With the company entering into a JV with SPH Group & Adia for $ 100-billion Chinese market, we believe the management is taking all the right steps towards the topline growth. Initially this JV will commercialise products manufactured by the company. Subsequently the JV plans to set up a manufacturing facility in China.
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