Alembic Pharma extends decline on mixed December quarter results

Shares of dipped 3 per cent to Rs 998 on the BSE in early morning trade on Wednesday, down 7 per cent in past two days, after the company reported a mixed bag of December quarter (Q3FY21) results.

The company’s consolidated revenues grew 8.7 per cent year-on-year (YoY) to Rs 1,314 crore on the back of strong growth in domestic, ROW formulations and API segment. However, US sales growth remained muted, down 0.6 per cent YoY at Rs 512 crore due to competition in Sartans.

The consolidated net profit jumped 25 per cent YoY to Rs 293 crore. EBITDA (earnings before interest, taxes, depreciation, and amortization) margins expanded 89 basis points (bps) YoY to 27.8 per cent due to better gross margins and lower R&D cost.

“Alembic Pharma’s were a mixed bag. While operational performance was below our estimates amid lower than expected; international (mainly US) and API sales, net profit was higher due to higher-than-expected profit contribution from JVs adnd associates,” ICICI Securities said in a note.

In the view of increased competition in the Sartan portfolio, the management has guided for $70 million as base US sales going ahead. Besides a decent show of results, with the aggressive R&D and capex, the management has signalled its long-term strategy that includes a foray into niche areas like oncology, injectables, derma, etc, the brokerage firm said.

Motilal Oswal Securities said Alembic Pharma missed Q3FY21 earnings estimate, weighed by lower-than-expected sales in the US. The adverse impact of the lower price of Sartans in the US was offset, to some extent, by healthy sales growth in the Domestic Formulation (DF), Non-US, API segment and stable other operating expenses.

“The physical inspections by the United States Food and Drug Administration (USFDA) across sites for the industry in India are delayed due to restrictions on international travel. However, Alembic Pharma may face the inspection earlier (over the next 3–6M) as it has filed for products on the shortage list,” it said.

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