Alembic Pharma hits new high, surges 45% in 4 weeks on strong Q4 results

In the past four weeks, Alembic Pharma outperformed the market by surging 41 per cent as compared to Sensex's 1.1 per cent gain

Shares of Alembic Pharmaceuticals advanced for the second straight day, up 6 per cent, to hit a new high of Rs 896 on the BSE on Friday. The stock has rallied 12 per cent in the last two days.

On the National Stock Exchange (NSE), the pharma firm's stock gained 3 per cent and hit a high of Rs 874. In comparison, the S&P BSE Sensex and Nifty50 index were down 2.5 per cent in the past two trading days. The stock price more-than-doubled from its recent low of Rs 436, touched on March 23, 2020.

In the past four weeks, Alembic Pharma outperformed the market by surging 41 per cent after the company's consolidated profit before tax (PBT) more than doubled at Rs 298 crore in the January-March quarter (Q4FY20), on the back of healthy revenue. The drugmaker had a PBT of Rs 139 crore during the same quarter in previous fiscal.

The company's total revenue during the quarter under review grew 30 per cent year-on-year (YoY) at Rs 1,207 crore against Rs 927 crore in the corresponding quarter of previous year. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded 900 basis points to 28 per cent from 19 per cent in the previous fiscal.

Last week, Alembic Pharma said its joint venture, Aleor Dermaceuticals, had received establishment inspection report (EIR) for its formulation facility at Karkhadi in Gujarat. Earlier this month, the company announced that the US Food and Drug Administration (USFDA) classified the company’s general oral solid formulation facility located at Panelav as Voluntary Action Indicated (VAI).

According to analysts at JM Financial Institutional Securities, with Alembic entering the last leg of its capex plan, most investment blocks for driving sustainable growth in the US in the medium term are in place. The domestic business is back on a double-digit growth trajectory after six quarters of muted performance.

With the impact of the withdrawal of stockiest promotions and portfolio rationalization now behind, Alembic’s domestic business is best positioned to grow faster than the market given the low FY20 base, significant scope for improvement in MR productivity and the increasing traction in the acute portfolio. Rhizen Pharma, Alembic’s associate entity, is expected to start contributing meaningfully in FY21 with its first out-licensed product expected to be filed during the year, the brokerage firm said in their pharma sector report. It has ‘buy’ rating on the stock with 12 month target price of Rs 960 per share.

At 09:45 am, Alembic Pharma was trading 3 per cent higher at Rs 872 on the BSE, against 0.36 per cent decline in the S&P BSE Sensex. A combined 130,000 shares have changed hands on the NSE and BSE so far.