timesfinancials.com research reports about alembic pharma Q4 results, and timesfinancials.com complete analysis about alembic pharma.

1. TimesFinancials Ltd./Research 1
hr
CMP: 121 (9th May 2013) Target: Rs.185.
Alembic Pharmaceuticals Ltd
BSE Code 533573
NSE Code APLLTD
Mkt Cap (Rs.bn) 22.83
Beta 0.61
52 week High 126.8
52 week Low 47.5
Avg volume (BSE) 68912
Avg volume (NSE) 145611
Face Value (Rs) 2
Equity (Rs mn) 377
Sector:Pharmaceuticals
Despite the seasonality factor, results for Q4FY’13 were above
expectations. With the two key growth drivers – generic dosages
exports and domestic formulation sales – doing well during the
quarter, the topline growth and OPM has been impressive.
Improvement in margins and cash flows leading to lower financial
costs is a continuing story. The highlight of the quarter was the
above industrial growth rate of the domestic dosages biz as the
share of chronic medications continues to rise. More importantly,
among the larger divisions, GI, CV and gynaecology have been
growing at a faster pace than the industry. Exports of dosages to
developed markets would receive a fillip in FY’14 once its
aggressive Rs.1bn capex gets commissioned fully during H1FY’14.
This would usher in a high growth phase during FY’14 and FY’15
as the pace of ANDA approvals too would gather pace.
Good prospects ahead:
The quarter was marked by a sharp growth in generic dosages exports
due to partial commissioning of the capacity expansion. Branded
dosages exports suffered a setback as a part of the capacity was used for
preparing samples for filings across the U.S, E.U and Latin America.
The domestic dosages business is set for a high teen growth as the share
of the chronic segment (currently at 51% and growing at 31%) increases.
The APIs biz is the bulwark of the company. With 59 DMF filings, it’s
able to cash on one-time opportunities from innovator companies.
Once the enhanced dosages capacity goes on stream, the management
expects a 35-35% CAGR for exports over the succeeding three years.
During FY’14 EBIDTA margin is expected to grow by 100-125bps.
Investment potential – High growth, low risk
Owing to the better business clarity, we are taking a two year call. Over
the FY’13-15 period, we expect the company to post a sales CAGR of
18.1% (Rs.15.17bn to Rs.21.16bn). Due to margin improvement, we
expect EBIDTA to post a CAGR of 29% (Rs.2.52bn to Rs.4.19bn). PAT
is forecasted to post a 32.5% growth (Rs.1.65bn to Rs.2.9bn). Our 12-18
months target is Rs.185 (12XFY’15EPS; at the lower end of its peer-
set), a 52.5% appreciation from the current level.
Amish Mishwani
Analyst: Healthcare
Support@TimesFinancials.com
www.TimesFinancials.com

2. TimesFinancials Ltd./Research
Quarterly Results [Consolidated]
Rs.Mn Q4FY12 Q4FY12 Growth Q3FY13 Growth Q2FY13 Growth Q1FY13 Growth FY13 Growth
Net Sales 3766 3408 10.5% 3688 -3.3% 4058 2.2% 3661 6.6% 15173 3.8%
Other opg income 15 16 -3.2% 5 -39.2% 11 1.9% 7 75.0% 37 -7.7%
Operating Income 3781 3423 10.4% 3693 -3.4% 4069 2.2% 3668 6.7% 15210 3.7%
COGS 1671 1530 9.2% 1506 -20.5% 1886 -2.7% 1744 1.6% 6807 -3.8%
% Net Sales 44.4% 44.9% 40.8% 46.5% 47.6% 44.9%
Excise duty 17 31 -30 12 11 10
Employees cost 508 431 17.8% 495 14.5% 486 20.3% 450 7.7% 1938 15.0%
% Net Sales 13.5% 12.7% 13.4% 12.0% 12.3% 12.8%
R&D Expenses 220 221 -0.6% 217 122.5% 160 9.8% 139 14.9% 737 25.7%
% Net Sales 5.8% 6.5% 5.9% 4.0% 3.8% 4.9%
Other expenditure 709 801 -11.4% 810 13.2% 878 1.7% 801 18.1% 3199 4.6%
% Net Sales 18.8% 23.5% 22.0% 21.6% 21.9% 21.1%
Operating Profit 656 408 60.7% 694 1.3% 647 7.0% 523 3.8% 2519 14.3%
% Net Sales 17.3% 11.9% 18.8% 15.9% 14.2% 16.6%
Other income 1 4 -82.5% 34 2 120.0% 2 175.0% 39 793.2%
PBDIT 657 412 59.3% 728 6.1% 649 7.2% 525 4.1% 2559 15.9%
Interest 18 54 -66.0% 39 -44.4% 31 -55.9% 57 -15.2% 146 -44.4%
Depreciation 86 89 -3.1% 89 9.4% 88 4.4% 87 5.7% 350 3.9%
PBT 552 269 105.0% 601 12.2% 530 17.6% 381 7.4% 2063 28.2%
% Net Sales 14.6% 7.9% 16.2% 13.0% 10.3% 13.6%
Current tax 102 53 93.3% 121 25.6% 106 15.9% 73 1.1% 401 28.5%
Effective tax rate 18.4% 19.5% 20.2% 19.9% 19.2% 19.5%
Deferred tax 14 14 -0.7% -3 -9.1% -1 -97.1% -1 10
PAT 437 203 115.1% 483 9.2% 425 11.7% 308 11.8% 1652 27.0%
% Net Sales 11.6% 6.0% 13.1% 10.5% 8.4% 10.9%
Equity 377 377 377 377 377 377
EPS 9.3 4.3 10.2 9.0 6.5 8.8
v Owing to the partial commissioning of the enhanced dosages capacity, YoY growth for
Q4 at 10.5% was the best during the fiscal, notwithstanding the seasonality factor.
v Due to a 11.4% dip in other expenses at Rs.709mn, operating margin for the quarter was
a respectable 17.3%. For the fiscal too, at 16.6%, it’s grown by 160bps.
v The pre-tax profit of Rs.552mn for the quarter means that for the past three quarters, it
has been in the Rs.530-600mn range. A continuous decline in net interest expenses had a
large role to play in this improvement.
v Relatively lower tax rate of 18.4% for the quarter has led to a PAT of Rs.437mn. Thus,
for the past three quarters, it has been in the Rs.425-483mn range.

3. TimesFinancials Ltd./Research 3
Highlights:
Cumulative ANDA filings stand at 57 with approvals at 24. Cumulative DMF filings
stand at 60. During the quarter, it had two ANDA filings and three approvals. DMF
filings during the quarter too were two.
The enhanced dosages capacity was partially commissioned during the quarter. Its
expected to run at full capacity of 5bn (from the current 2.6bn) dosages by the first half of
FY’14. Of the Rs.1.02bn spent on capex in the current fiscal, Rs.870mn was for the
dosages expansion.
NDA for Desvenlafaxine HCl XR tabs was approved during the quarter. This is a
bioequivalent of Pfizer’s Pristiq (Sales of $573mn), though not AB rated. APL’s first 505
B2 application, it has been partnered and launched by Ranbaxy.
During the year, three dossiers were filed with ANVISA and two were filed in the EU.
DER has improved significantly from 0.9 in March 2012 to 0.33.
Sales break-up:
Rs.Mn Q4FY13 Q4FY12 Growth Q3FY13 Growth Q2FY13 Growth Q1FY13 Growth FY13 Growth
Formulations 2980 2526 18.0% 3037 11.3% 3136 1.0% 2508 2.4% 11662 7.9%
Domestic 2075 1845 12.5% 2276 14.5% 2539 11.9% 1972 14.4% 8863 13.2%
Export - ROW 129 177 -27.5% 150 -3.7% 87 -27.9% 76 -33.3% 441 -22.2%
Export - Reg 777 504 54.2% 611 4.4% 510 -28.5% 461 -24.7% 2358 -2.5%
Bulk 787 873 -9.9% 670 -38.3% 910 10.3% 1140 19.3% 3506 -6.1%
Domestic 250 192 30.3% 250 33.5% 334 51.5% 305 -12.3% 1138 20.8%
Export - ROW 537 681 -21.3% 420 -53.3% 576 -4.7% 835 37.5% 2367 -15.2%
Total 3767 3399 10.8% 3707 -2.8% 4045 3.0% 3648 7.2% 15167 4.3%
In the domestic market, it maintained its market share at 1.79% by virtue of the 13.2%
growth during the year. The chronic and acute segments posted a 27% and 3% growth
respectively vis a vis 11% and 3% for the industry. In recent months, industrial growth
rate has declined from 15-16% to 11%.
During the year, it launched a dermatology division, with eight products. This addition to
the basket of specialty products is expected to propel future growth.
Exports to the regulated markets spurted by 54% to Rs.777mn during Q4. However, for
the fiscal, sales at Rs.2.36bn was down by 2.5%.
During the quarter, desvenlafaxine base XR tablets was launched in the U.S.
Recent generic approvals
Product Dosage (mg) Approval date Branded sales ($Mn) Opportunity
Modafinil 100, 200 Oct’12 1200 Limited competition
Valsartan+HCT Multiple Mar’13 1600 High competition
Irbesaratan Multiple Oct’12 2100 High competition
Irbesaratan+HCT Multiple Oct’12 351 High competition

4. TimesFinancials Ltd./Research 4
Domestic biz on the growth path:
v During Q4FY’13, while the share of anti infectives in domestic sales has declined by
500bps to 36%, that of specialty therapies has risen by a whopping 600bps to 51%.
Comparative growth rate
Segment FY’13 FY’12
MS Inds Alembic Inds Alembic
Anti Infective 4.4% 3.0% 2.0% 11.0% 8.0%
Gastro 2.6% 11.0% 25.0% 11.0% 28.0%
Cough and cold 5.1% 8.0% 8.0% 9.0% 6.0%
Cardio 1.4% 12.0% 42.0% 16.0% 22.0%
Gynaecology 2.3% 5.0% 30.0% 11.0% 6.0%
Ortho 1.2% 7.0% 6.0% 11.0% 10.0%
Diabetology 1.3% 23.0% 40.0% 25.0% 26.0%
Nephro/Uro 2.2% 15.0% 63.0% 17.0% 25.0%
Opthal 1.6% 7.0% 48.0% 15.0% 13.0%
v Among the top five therapies, the anti infective and gynaecology segments have been
witness to a sizable degrowth. While the company has fared badly in the former, in the
gynaecology segment, it has posted a 30% growth vis a vis a 5% growth for the segment.
It has managed to post a very good growth rate in the GI and CV segments but the cough
and cold segment continues to be a drag with high single digit growth rates.
v Among the emerging segments for the company, while the orthopaedics segment has
posted a 400bps degrowth, the diabetology and urology/nephrology segments have
continued to outpace the industry with the company outpacing the segments by a huge
margin.
v In a nutshell, as the share of anti infectives and cough and cold in overall domestic sales
declines, the overall growth would outpace the industry growth by a wider margin.
v A dermatology division with eight products was launched during the year.
v Future investments are earmarked for the faster growing segments.
Con-call highlights:
v During the quarter, it posted a forex gain of Rs.32mn. Gains for the fiscal was Rs.45mn.
v Milestone payment for FY’13 was around Rs.250mn. Since a part of this was on account
of desvenlafaxine (received in Q3FY’13), the management has guided for a lower figure
in FY’14.
v Of the regulated market sales, the N.American market accounts for 60% of revenues. US
generic sales would drive sales over the next two years. The management expects exports
to regulated markets to grow by 30-35% over the next 2-3 years. Apart from the spurt in

5. TimesFinancials Ltd./Research 5
US sales, the outlook for U.K and German too are good. The management expects to
launch 8-10 products every year over the next three years in the U.S market. During the
current fiscal, it launched seven products.
v Going forward, the emphasis would be on niche products and NDA filings. Apart from
oral solids, the current focus is on Para-IV challenges to be followed by filings in niche
and high technology areas like inhalations and dermatology. For FY’14, it targets 10-12
ANDA filings, 3-4 of which would be FtoFs. During FY’13, it’d three FtoFs. A 505 b-2
application is expected in the case of Warfarin over the next 12 months based on the
Accubreak technology.
v R&D expenses, currently around 5% of sales is expected to gradually inch upto 6-7% of
sales.
v It has great expectations from Modafinil, which was launched recently owing to the
limited competition. Valsartan too, which is slated for launch in the next few months
holds good promise due to the large opportunity. The biggest growth driver for the
current fiscal, DesVenlafaxine has seen the shipment of a portion of the launch quantity
during Q4FY’13. It expects sales to kick in from Q1FY’14 with a gradual gain in market
share.
v In the case of EU and Brazil, it expects traction in FY’15 when three products are
expected to be launched in both the markets, either on its own or through partners. It
already has three launches in Australia.
v Apropos the domestic dosages, the growth in the GI segment was led by sartans, while in
the case of gynecology, Ovigyn-D has fared very well. That apart, the ophthalmology
division has attained critical mass and is expected to start generating profits. New product
launches (25 during the fiscal) contributed 3.2% to sales.
v The emphasis is on enhancing productivity. During the past twelve months, it has
recruited only 100 MRs for the new derma division. The current MR strength is around
3,000 with the supervisory strength being another 600. For FY’14, domestic dosages is
expected to grow at 15%.
v The API biz has struggled owing to the high base effect and the greater emphasis on
captive consumption. It expects this division to post a 10-15% growth.
v Debt decreased sizably during FY’13 as it managed to close out inter group transactions.
It expects to become debt free in the current fiscal. The capex for FY’14 is estimated at
Rs.600mn. In order o prepare for the future growth, it has plans of setting up a new unit
from FY’15 at an outlay of Rs.1.5-2bn for international generics.
v It expects a 100-125 expansion in operating margins year on year.

6. TimesFinancials Ltd./Research 6
Balance sheet (Consolidated)
Rs.Mn FY13 FY12
Equity 377 377
Reserves 4652 3573
Networth 5029 3950
Secured loans 833 1071
Unsecured loans 701 1384
Total debt 1534 2456
Total capital employed 6563 6406
FA 3765 3261
Investments 33 33
Inventories 2668 2587
SDs 2329 1993
Cash and bank 161 471
Loans and advances 1522 2174
Total Cas 6680 7226
CLs 3092 3607
Prov 684 411
Total CLs 3776 4018
NWC 2905 3208
DTA -139 -95
Total assets 6564 6406
Gearing 0.3 0.6
Current ratio 1.8 1.8
Asset turnover 4.0 4.5
ROCE 33.1% 29.2%
RONW 32.9% 32.9%
Inventories 119 111
SDs 56 50
Loans and advances 64 91
Mcap 22999
EV 24372
EV/EBIDTA 9.6
Valuation:
Owing to the better business clarity, we are taking a two year call. Over the FY’13-15
period, we expect the company to post a sales CAGR of 18.1% (Rs.15.17bn to
Rs.21.16bn). Due to margin improvement, we expect EBIDTA to post a CAGR of 29%
(Rs.2.52bn to Rs.4.19bn). PAT is forecasted to post a 32.5% growth (Rs.1.65bn to
Rs.2.9bn). Our 12-18 months target is Rs.185 (12XFY’15EPS; at the lower end of its
peer-set), a 52.5% appreciation from the current level.
Coverage History with adjusted price
Date of coverage CMP Recommendation Price target
3rd
October 2011 41.3 BUY 65.0
19th October 2011 45.2 BUY 65.0
2nd
February 2012 41.9 BUY 65.0
26th
April 2012 53.3 BUY 85.0
9th
August 2012 58.8 BUY 100.0
19th
October 2012 69.5 BUY 100.0
22nd
January 2013 69.4 BUY 100.0
9th
May 2013 121.0 BUY 185.0

7. TimesFinancials Ltd./Research 7
Domestic formulation sales (ORG IMS)
Therapy Brand FY’11 (9M) FY’12 FY'13 Growth
Anti Infectives
Azithral 728 1189 1332 12.0%
Azithral XL 54 78 43.0%
Althrocin 619 919 928 1.0%
Roxid 443 577 543 -6.0%
Zofix 71 191 187 -2.0%
Megaclav 48 135 167 24.0%
Fort.Proc.Peni 83 80 -3.0%
Furobid 41 58 41.0%
Cepime-O 56 51 -9.0%
Anti diabetic
Glisen 51
Glisen-MF 76 118 55.0%
Glisen-PM 42 53 25.0%
Glimser 28
Glimser-P 37 51 36.0%
Vogo 19 46 70 51.0%
GLZ 11
Popfix 9
Cardio
Revas 82 46 52 13.0%
Revas-H 55 60 9.0%
Atecard 56 59 57 -4.0%
Tetan 55 64 78 22.0%
Tetan-H 50 71 42.0%
Tetan-AM 39 58 49.0%
Tellzy 45 52 87 68.0%
Tellzy-H 41 71 72.0%
Tellzy-AM 38 67 74.0%
Rosave 21 44 65 48.0%
Gastro
Ulgel 200 252 295 17.0%
Ulgel-A 103 138 34.0%
Rekool 198 132 159 20.0%
Rekool-D 180 225 25.0%
Rekool-L 76 136 78.0%
Livfit 88 176 168 -5.0%
Levogastrol 33 58 66 14.0%
Urdiogem 19
Pentab-D 85 107 26.0%
Gynaec
Gestofit 62 131 267 103.0%
Protinules 48 101 123 22.0%
Ricahr XT 46 82 73 -11.0%
Cycloset 45 80 83 4.0%
Ovigyn 37
Ovigyn-D 47 98 110.0%
Ortho
Osteofit 70
Magadol 50 86 91 6.0%
Nimegesic 46
Etrik 34 54 65 19.0%
Axogard 17

8. TimesFinancials Ltd./Research 8
Therapy Brand FY’11 (9M) FY’12 FY'13 Growth
Respiratory
Wikoryl 253 517 522 1.0%
Zeet 235 256 274 7.0%
Bro-Zeet 135 146 8.0%
Glycodin 64 112 105 -6.0%
Laveta 38
Laveta-M 44 62 39.0%
Ephedrex 30
Vitamins and tonics
Sharkoferrol 104 219 221 1.0%
Hermin 39 83 100 20.0%
Cadx 10
Diax 8
Vitaresp 3
Lactonic 67 96 43.0%
Al5Zyme 39 55 41.0%
Nephrology
Geriflo 49 55 60 9.0%
Geriflo-D 59 77 31.0%
Darif 6
Fulflo 3
Grand Total 4653 9706 10968 13.0%