Buy Alembic Pharma; target of Rs 1170: ICICI Direct Research Report

Buy Alembic Pharma; target of Rs 1170: ICICI Direct

ICICI Direct is bullish on Alembic Pharma recommended buy rating on the stock with a target price of Rs 1170 in its research report dated October 24, 2020.

ICICI Direct’s research report on Alembic Pharma

Q2 revenues were in line with I-direct estimates whereas profitability was better than expected. Revenues grew 17.4% YoY to Rs 1457 crore led by strong growth in RoW and API segments, which grew 84.1% and 28.9% to Rs 197 crore and Rs 263 crore, respectively. Additionally, US formulations grew 8% to Rs 582 crore whereas domestic formulations grew 6.1% to Rs 415 crore. EBITDA margins improved 259 bps YoY to 30.4% due to better gross margins and lower other expenditure amid lower promotional, travelling and R&D costs. Subsequently, EBITDA grew 28.3% YoY to Rs 443 crore. PAT grew 35.4% YoY to Rs 333 crore due to a strong operational performance.

Outlook

We maintain BUY rating and arrive at a target price of Rs 1170 based on 20x FY23E EPS of Rs 58.5.