Alembic Pharma Q4 Results Review - New Launches In U.S., Capacity Utilisation To Drive Growth: Nirmal Bang

Nirmal Bang Report

Alembic Pharmaceutical Ltd. reported a mixed performance for Q4 FY24. While revenue missed estimate, margin beat estimate on the back of softening raw material prices, capacity utilization and changes in inventory.

U.S. business declined by ~11% QoQ, but grew by 18% YoY. The QoQ was down on the back of some one time orders in Q3 FY24; the YoY growth was supported by product launches from new plants. Like in the past, the management is hopeful of capitalising on drug shortages in the US. India business grew by ~3% YoY, led by strong growth in specialty and animal healthcare segments, largely offset by weak growth in acute therapies. The specialty segment grew faster than IPM growth.

Despite continuous spending on capex and research and development for the U.S. market, we do not see any meaningful visible large launches in the US.

Additionally, there is still pricing pressure for some of the U.S. products. Near term growth is highly dependent on the success of new launches from new U.S. plants.

We maintain Accumulate on Alembic Pharma with a target price of Rs 981, valuing it at 18 times FY26E earnings per share.

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