Alembic Pharma (Oral Solids ==> Injectables, Onco, Derma, Opthalmic)

Was checking Chirayu Amin and Alembic background. Found some stuff which does not paint in good light specially the last one:

http://www.indiaenvironmentportal.org.in/news/alembic-plant-gujarat-asked-shut-down
http://news.outlookindia.com/items.aspx?artid=714773

Paushak is another of the group’s listed company. Alembic’s real estate was launched in 2010. And this while the Whitefield property was shortchanged as part of Alembic glass delisting in 2006.

Would the pharma biz be compelling enough to buy given these folks past?

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Track record of alembic people is not good if one looks at the way minority shareholders were treated in shreno.

But with pharma business now with the eldest son of chirayu amin, it seems focus will be more on business rather than other things.

Still I wont rate promoters of alembic as highly as those of say mayur or unichem.

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Hitesh bhai,

Seems like our dear Tulsian-jee liked your pick and recommended it as his multi-bagger for the day.

I can guess his next pick will be Kaveri seeds for sure :slight_smile:

There was a fire in Panoli API facility of alembic pharma. From newspaper reports, there was no major casualty in terms of workers being affected mainly because it started around the time of shift change which saved the workers.

After working hard for around 6 hours the fire people put out the fire.

This was reported in yesterday’s gujarati newspaper gujarat samachar. I happened to look at the newspaper today.

Probably one of the reasons for sharp correction in stock price from around 74 to 65 levels.

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There is a downward trend in the basic rawmaterial, erythromycin, since past 3-4 months. It is down from USD86/kga to 60 levels due to new capacity buildup in china. There may be some margin expansion in this quarter, if this range forms substantial part of alembic’s sales. API manufacturers enjoyed the benefit last quarter, now prices are being reduced from API mfrs to Formulation mfrs. But again it is competitive market and depends upon how long the higher price could be held on by the mfrs

CONFERENCE CALL

International business to grow by 30-35% for FY’14

Alembic Pharma announced the results and held a conference call on 22nf January 2013 to discuss the results and future growth strategies. The key takeaways of the call are as follows.

**

Highlights of the call:

**

  • The Domestic formulations sales up by 15% YoY to Rs 228 crores for the quarter ended December 2012.
  • The Growth of 23% in Specialty business in various therapies like Gastro with 28% growth, Cardio 28% growth, Anti Diabetic 35% growth, Nephrology/ Urology 32% growth, Ophthalmology 25% growth, Anti Infective & Cold & Cough with 4% growth.
  • The Future Investments in newer specialty segments like Gastroenterology, Cardiology, Gynaecology, Ophthalmic, Anti-Diabetic, Nephrology and others.
  • The Share of Business on anti-Invectives has gone down from 44% in Q3 FY12 to 41% in Q3 FY13 of total domestic formulation sales.
  • The Launch of Dermatology division during the year with 8 products will further add to the basket of specialty products and growth in future.
  • It has filed Six ANDA filing during the quarter taking the cumulative filing of ANDAs to 55 and Cumulative approvals of ANDA at 21 as on 31stDecember 2012. Further, the Cumulative filings of DMF stand at 58. Further, it has launched 2 ANDA’s during the quarter.
  • It expects the 8-10 product launches in the US market every year.
  • The Expansion of formulation facility (phase I) to be completed by February 2013 which will increase capacity by 2.6 billion tablets/capsules to 5 billion. This will help business in driving significant growth in International Generics.
  • There is increased focus on Europe and emerging markets apart from US markets. The 3 Brazilian Dossier filed with ANVISA and 2 dossier filed in Europe during the year.
  • The International business revenues break-up is as follows â North America contributes 60-65% of sales, Europe contributes 30% of sales and the rest comes from the remaining markets.
  • The New Pharma Pricing Policy has to pass the Supreme Court hurdle and the notification prices will give the accurate impact. However, it expects the impact of Rs 25 crore on topline & bottom-lines for the year.
  • In the domestic market, there is slow down in acute portfolio in the Industry but expects the things will improve going forward.
  • It has launched 25 products (6 in Q3) on the chronic side for the nine months ended December 2012.
  • It expects the API business to grow 10-15% going forward and looking only for the high margin business only.
  • The field force is 3600 as on 31stDecember 2012, which includes 3000 MR’s and 600 supervisors.
  • The R & D expense for Q3 FY 13 is Rs 21.72 crores representing 5.9% of sales for the quarter ended December 2012. Further, it expects to be in the range of 4-6% going forward.
  • The Capex is Rs 140 crore for FY’13 and indicated that there are no major Capex plans going forward.
  • The forex loss was Rs 2-2.5 crore in Q3’FY 13 and Rs 4-4.5 crore for the nine months ended December 2012. It has hedged 20-25% of the net receivables.
  • The revenues from the International business expected to grow by 30-35% for FY’14 on the new capacities and new product launches in the US Market. Further, It expects to grow better than market in the domestic market.
  • The Debt/Equity ratio is 0.44 as on 31stDecember 2012. It expected to repay the debt of Rs 20-25 crore in Q4 and around 100 crore in the FY’14.

Source: Capital Market

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Hitesh,

Whats your advice on this,i had bought this initially since you had positive views on this and the main drivers would be in fy14,it has risen from 60 levels to 90,would it still be a good buy at these levels.I couldnt buy enough at 60,since the conviction level was not there and had not done enough research

I think this is one of the most underrated stock in our Valuepickr stable. It has quietly more than doubled since we started looking at it. Hitesh bhai and Donald, what are your views about the company? Is it a good buy at CMP?

100% agreed with Ankit here. I have missed the bus at 49. Ride again at 101, and is continuing the SIP approach of buying on every month.

They have a ROE, ROCE figure in and around 30. around 20% dividend payout rate, available at a PE of 16. If you see their quarterly figure, debt is slowly reducing and they should get a gain of 10cr in NP just by paying less interest.

Management has guided a 15% domestic growth rate and 35-40% growth in export. With 2:1 ratio between domestic and international we get 20-23% growth in sale. I don’t have much idea on the margin difference between these 2, so can’t arrive on the exact NP growth figure.

Assuming a 20% growth scenario, NP for FY14 should be 165*1.2(20% growth) + 12(lower debt == lower interest) = 210, a cool 27% up from FY13.

Disc: Invested in Alembic, 7% of my portfolio. Planning to take it to 10% range.

Alembic has been recommended as 2013-14 top picks by Edelwiss folks (along with Astral, ARBL, V-Guard, and few others). This shows the strength of valuepickr platform, our ability to find gems much before big guys stumble upon it.

http://rakesh-jhunjhunwala.in/index.php/2013/06/23/edelweiss-top-stock-picks-for-2013-2014/#&panel1-5

Alembic AR is the best AR I have read in this quarter. It is an awesome read. Those who do not understand pharma, or want to understand pharma in a much more details (i.e where the market is headed, where there is $$$) Alembic Pharma AR is “the AR” to read.

It is up 8-10% today hiting its life time high.

Hi Subash,
Can you please post the AR link?

http://www.alembic-india.com/upload/05APL%20-%20Annual%20Report%202012-13.pdf

Alembic AR is the best AR I have read in this quarter. It is an awesome read. Those who do not understand pharma, or want to understand pharma in a much more details (i.e where the market is headed, where there is $$$) Alembic Pharma AR is “the AR” to read.

It is up 8-10% today hiting its life time high.

Thanks Subash :slight_smile:

Very good Jun-13 qtr result from Alembic

Sale up 16%

EBITDA up 37%

NP up 59%

As per management, they are expecting a 20% EBITDA growth (15% growth in domestic front, 35% in international front). With reduction in debt, this should imply a 25%+ NP growth for next year.

At a pe of ~16, this seems a very good buy for me as in the upside it can have a pe of 20 odd. So it can give 25-50% odd return in next 1yr time frame, i.e. a price of 200-240 should be expected in 12-15 month period.

Disc: Alembic is 17% of my portfolio. It is my 3rd largest portfolio, and planning to continue my staggered buying approach for buying it.

The results are excellent.And a P/E of 20 is very much on the cards going forward.I think the next re-rating trigger would come if the company can increase the revenue weightage of its International business,consistently.With Drug Policy,the domestic biz is likely to suffer & even squeeze margins.On the other hand the Interantional biz is growing at a scorching pace(both Generic & Branded) So a gradual shift to International markets,accompanied by the already strong pipeline should do wonders for the co.The Desvenlafaxine drug is an icing on the cake. :slight_smile:

Alembic continues to maintain good growth momentum in the domestic market outpacing industry growth in july by growing over 18%

http://www.thehindubusinessline.com/companies/antiinfectives-respiratory-drugs-drive-pharma-growth-in-july/article5029555.ece

Hi All,

I bought @ 71. Should I continue to accumulate ?

Regards,

Hari

Hi Hariharan,

Past buying price should not be part of your current buying decision. One should always look forward when doing investment.

Coming to Alembic pharma, which is available at mouthwatering pe of 15, and is currently amongst fastest growing pharma companies in India. To me it is worth adding it in small chunks in regular interval till its current run of 20-30% y-o-y growth rate persists, and stock is available at a discount to average pe of pharma companies of similar size (i.e 20-22).

Disc: Alembic is my 2nd largest holding, have been adding it from 100 odd level in lower side to 147 in higher side. Have been doing SIPPing small chunk in it at regular interval, and large chunk when it falls rapidly (which is quite common in the case of Alembic).

Regards,

-Subash

We recently met Alembic Pharma and came away impressed. They seem to be focused and much more confident this year, than last.

Alembic Investor Presentation is a delight and has 90% of usual details that we seek. Kudos to the Management for keeping it updated and high-quality.

Apart from that obvious confidence on display, what we could gain extra is a few more operational insights, and some details on strategic forays. Will take some time to prioritise and capture back the Management Q&As - some 5 companies this time. Please bear with us.