Capstocks Equity Research

Company Analysis
12th Sep 2013
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Capstocks Research Team

Conviction Ideas - 101

Alembic Pharma

Recommendation
Reiterate Buy: Rs.141
Target: Rs. 162
Holding Period: 2 Months
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COMPANY OVERVIEW:

Alembic Pharmaceuticals Limited (APL) is a leading pharmaceutical

company in India and was established in the year 2010 by demerger of
pharmaceuticals undertakings of Alembic Ltd. The Company is vertically
integrated with the ability to develop, manufacture and market
pharmaceutical products, pharmaceutical substances and Intermediates. APL
is the market leader in the Macrolides segment of anti-infective drugs in
India. The companys manufacturing facilities are located in Vadodara and
Baddi in Himachal Pradesh. The plant at Vadodara has the largest
fermentation capacity in India. The Panelav facility houses API and
formulation manufacturing (both US FDA approved) plants. The plant at
Baddi, Himachal Pradesh manufactures formulations for the domestic and
non-regulated export market. The company has a state of the art Research
Centre at Vadodara.

BUSINESS:

The company has six business units and they are Active Pharmaceutical
Ingredients (API), Bulk Pharma, Formulations, Herbal Nutraceuticals,
Veterinary and CRAMS. API's continue to make up a significant part of the
operations for Alembic Pharmaceuticals Limited. The fermentation based
APIs are manufactured at its main manufacturing facility exceeding 3
Million sq.mt. APL has an exclusive facility for manufacturing synthetic
APIs, consisting of independent manufacturing blocks for Macrolides,
NSAIDs and other drugs. The API manufacturing facility at panelav has
successfully under gone inspection of USFDA and EDQM. Under bulk
pharma segment the synthetic BPC business is supported with an
independent facility. This facility has its own independent quality control
and Analytical Development facility. Equipped with an excellent pilot
facility for scale-up, this facility is already working with leading firms by
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Capstocks Equity Research

Company Analysis
12th Sep 2013
_______________________________________________________________________________

supplying critical intermediates for their pipeline products. The company

has extensive range of finished dosage formulations cover every aspect of
human life. Its basket of formulation products contain more than 150
products in several forms belonging to diverse therapeutic segments
including anti-infective, cough & cold products to cardiovascular and oral
anti-diabetics. The manufacturing expertise is available for almost all dosage
forms including sterile as well as non sterile products. Formulation which
account for 65% of the total business now is having its manufacturing
facility at three different places namely Vadodara & Panelav at Gujarat in
the west & Baddi at Himachal Pradesh in the north. The facility at Panelav
enjoys certifications from international regulatory authorities like MHRA
(UK), MCC (South Africa).The formulation business has crossed the
boundaries of India and is well spread to many other countries in overseas.
Thus there are three wings of formulation business and they are Internationa,
Domestic and Veterinary. Under herbal nutraceuticals the company has
brands like protinules and Sharkoferrol.
CONSOLIDATED FINANCIAL HIGHLIGHTS:

Net Sales Cr.

Reported Profit Cr.
EPS Rs.
Book Value Rs.
Dividend Rs.

2012
1465.4
130.1
6.6
20.9
1.4

2013
1520.3
165.2
8.3
26.6
2.5

Investment Rationale:
Alembic Pharma is one of old, leading Indian pharmaceutical company. On
domestic front, the company has strong distribution reach, consistently
launches new products and maintains its market share in spite of tough
competition. The company has 4 brands among Top 300 brands in India and
they are Azithral, Roxid, Althrocin and Wikoryl. Apart from domestic
business, the company actively concentrates on exports markets including
highly regulated US and succeeded on getting regulatory approvals for drug
launch. On March 5, 2013 APL received approval from the US FDA for its
desvenlafaxine base extended release tablets. NDA-Desvenlafaxine is a
bioequivalent version of innovator drug, Pristiq by Pfizer. The company
spends around 5% of its revenue for R&D and continues to explore new
opportunities. Recently the company has increased its capacity to cater high
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Capstocks Equity Research

Company Analysis
12th Sep 2013
_______________________________________________________________________________

growth export market and the positive impact will get reflected in coming
results. Considering its growth potential investors willing to buy a quality
Pharma Company can consider buying Alembic Pharma at current market
price with medium term perspective.
SHAREHOLDING PATTERN AS ON June 2013
%
PROMOTERS
Indian
Total
INSTITUTIONS
Mutual Fund
Insurance, FI
FII
Bodies Corporate
Public and Others

74.13

0.89
0.48
7.73

NSE SYMBOL
FACE VALUE Rs.
EPS Rs.
BOOK VALUE Rs.
P/E

APLLTD
2
8.3
26.6
17.1

1.20
15.57

Prepared By:

CAPSTOCKS RESEARCH TEAM

CAPSTOCKS & SECURITIES (INDIA) PVT LTD
Tel: 0471-4013887
E-mail: research@capstocksindia.com
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Disclaimer: Capstocks & Securities India (Pvt) Ltd do not accept responsibility for consequences of
financial decisions taken by readers on the basis of information provided herein. The aim is to provide a
reasonably accurate picture of financial and related opportunities based on information available with us.
Issued by the Equity Research & Analysis Department of Capstocks & Securities India (Pvt) Ltd, Capstocks
Towers, Thakaraparambu Road, Trivandrum 695023, Kerala. Please note that Capstocks, its directors and
associates may have trading or investment positions in the securities mentioned herein

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