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Alembic Pharma Q2 Results Review - Strong Execution Drives Earnings Beat: Motilal Oswal

Part of the earnings was boosted by certain one-time opportunities in the U.S. generics segment.

<div class="paragraphs"><p>A person pouring yellow pills into his hand from container. (Photo: freepik)</p></div>
A person pouring yellow pills into his hand from container. (Photo: freepik)

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Motilal Oswal Report

Alembic Pharmaceuticals Ltd. delivered better-than-expected earnings for Q2 YF23, fueled by healthy growth across domestic formulation, exports as well as active pharma ingredient segments.

Part of the earnings was boosted by certain one-time opportunities in the U.S. generics segment.

We raise our earnings per share estimate for FY23 by 5% to factor in:

  1. superior traction in the U.S. generics segment,

  2. better-than-industry growth in the DF segment and

  3. robust order-book in the API segment.

While product approvals would enable long awaited scale-up of operations at injectable sites (F2/F3) and subsequently drive 53% YoY earnings growth for FY24E, the return on equity still remains muted at 11%.

Further, the U.S. generics business trades at a much lower multiple (at 12-15 times earnings) versus branded generics (at 22-25 times earnings) and due to Alembic Pharma’s increased share of business expected from the U.S. generics, the overall valuation multiple is likely to remain capped despite strong earnings growth.

Click on the attachment to read the full report:

Motilal Oswal Alembic Pharma Q2FY23 Results Review.pdf

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