Visit http://indiaer.blogspot.com/ for complete details Alembic
Alembic reported its 2QFY2011 results, which were ahead of our estimates. Net sales
came in at strong `363cr (`282cr), up 27.8% yoy, driven by the domestic formulation
business (up 27.3%, `207cr), domestic API business (up 126.7%, `55cr) and export
formulation (up 18.8%, `55cr) business; however, the export API business declined (down
10.7%, `45cr). The company reported gross margins of 51.5% (53.9%), primarily on
account of higher proportion of low-margin domestic API business (15.1% v/s 8.5%).
Employee expenses increased 19.6% yoy to `46cr (`39cr). Alembic reported OPM of
11.9% (11.9%), which was marginally lower than our estimates. Financial cost went down
26.3% yoy to `7cr (`9cr). Depreciation cost remained flat at `12cr. Alembic reported net
profit of `22cr (`13cr), up 64.3% yoy, driven by top-line growth and lower financial cost.
We recommend Accumulate on the stock with a Target Price of `74.
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