ALEMBIC PHARMACEUTICALS LIMITED – FUNDAMENTAL ANALYSIS

ALEMBIC PHARMACEUTICALS LIMITED

CMP: 554.25     Target Price: 670.00     Upside:21%

Face Value (Rs.) 2.00
52 Week High/Low 709.30/469.75
M.Cap (Rs. in Cr.) 10447.61
EPS (Rs.) 21.85
P/E Ratio (times) 25.36
P/B Ratio (times) 5.24

 

Dividend Yield (%) 0.72
Stock Exchange BSE
Alembic Pharma
Alembic Pharma

 

INVESTMENT RATIONALE:

  • Alembic Pharmaceuticals, a vertically integrated research and development Pharmaceuticals Company, Alembic’s state of the art research and manufacturing facilities are approved by regulatory authorities of many developed countries including the US FDA. It is one of the leaders in branded  generics in India.
  • The company is implementing a Rs 1000 crore capex plan. The company has allocated a significant share of revenues to R&D to create a product pipeline for the US.
  • It started focusing on the US market, in the past three years, the company has not only increased its research and development (R&D) efforts for the US market but has also acquired Orit, an oral solids and liquids manufacturing firm. Orit has seven approved and four pending ANDAs, along with a anufacturing facility.
  • Alembic has a 200-product grid for the US market, up from 40 in three years and expects to launch 10-12 products for the US market every year. It is expected 50 per cent of its revenues to come from the US market by 2019-20.
  • As of January 2018, the firm has cumulatively filed 119 ANDAs for the US, received 70 approvals and 49 are pending. The filing rate has picked up in the last two years. It filed 20 ANDAs in 2016-17 and aims to end 2017-18 with 25 ANDA filings.
  • Alembic Pharmaceuticals announced that US health regulator has granted orphan drug designation to its associate company Rhizen Pharmaceuticals SA’s RP6530 used for treatment of cancer. A number of incentives are provided for an orphan-drug such as a 7-year marketing exclusivity, tax credit for clinical development costs, exemption/waiver of application (filing) fees and assistance from the USFDA office of Orphan Products Development during the development process.

 

VALUATIONS:

The company continues to maintain its market share owing to its strong distribution reach, strong field force and product launches. The company has strong formulation business in domestic and international market. The Company is vertically integrated with the ability to develop, manufacture and market pharmaceutical products, pharmaceutical substances and Intermediates. Thus, it is expected that the stock will see a price target of Rs.670 in 8 to 10 months time frame on a three year average P/E of 26.22x and FY19 (E) earnings of Rs.25.55.

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Disclaimer:

My descriptions, videos, presentations are only for educational and information purposes and under no circumstances should be used for making investment decisions. I cannot guarantee the accuracy of any information provided.
The stocks picks are based on my own research and personal views and sometimes are from newspapers, tv channel program, magazines, etc. No part of compensation is or will be directly or indirectly related to the views and recommendations of this research. I have not served as an officer director or employee of company and have not been engaged in market – making activity of the company covered in the research report.
Consult qualified financial advisor before making any investment decision.

 

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