Alembic Pharma shares gain 5% to hit a new high after robust Q1 earnings

The company reported a net profit of Rs 301 crore in Q1FY21, against Rs 124 crore in the year-ago quarter.

Shares of Alembic Pharmaceuticals hit a new high of Rs 1,044, up 5 per cent on the BSE on Wednesday after the company's profit more-than-doubled to Rs 301 crore in June quarter (Q1FY21), on the back of strong revenue growth in the US. The pharmaceutical company had a profit of Rs 124 crore in the year-ago quarter.

The company's net sales grew 41 per cent at Rs 1,341 crore against Rs 949 crore in the corresponding quarter of the previous fiscal. EBITDA (earnings before interest, taxes, depreciation, and amortisation) rose 108 per cent to Rs 416 crore, while margins improved to 31 per cent from 21 per cent in the previous year quarter.

Analysts on an average had expected a net profit of Rs 190 crore on revenues of Rs 1,123 crore for the quarter. In the past three months, the stock has rallied 60 per cent against a 20 per cent rise in the S&P BSE Sensex.

The management said the period was an excellent quarter for the company backed by growth in all the international markets. Despite exceptionally, challenging circumstances, the operating teams ensured profitability and growth.

Alembic Pharma is building a robust foundation for the next phase of growth in the US through huge capex (Rs 1,500 crore spent over FY16–20). This would be used to enhance its manufacturing strength in dosages other than oral solids (largely Injectables, Ophthalmic, and Derma); the company would be in the late stage of the capex cycle with Rs 700 crore in FY21.

“This move is supported by an industry-leading R&D spend (at 13–14 per cent of sales) of Rs 2,290 crore over FY16–20. It has helped the company develop a strong product pipeline (200+ under development) for different dosages, which is expected to drive growth over the next three to four years,” Motilal Oswal Securities said in a company update.

At 02:21 pm, Alembic Pharma was trading 2 per cent higher at Rs 1,017 on the BSE, against 0.44 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped an over three-fold with a combined 2.1 million equity shares changing hands on the NSE and BSE so far.