Alembic Ltd: Not rated
Alembic Ltd, established in the year 1907 has a strong presence in the domestic market with focus on the acute segment. The company derives 70% of its revenue from the domestic market which is estimated to grow at 15% annually over the next two years. Acquisition of Dabur Pharma’s non oncology division (growing at 17% annually, FY07E revenue of Rs800mn) has given the company an opening in the chronic therapy segment. The management is confident of growing this division at over 25%. However the full potential of the acquisition would be realized post H2 FY08 given the time required for integrating the existing divisions with the newly acquired business.
The next wave of growth would be from the regulated markets for supply of formulations and APIs. The management is looking at generating US$100mn from the export market by FY09-10. While there is increasing visibility on the domestic market growth, gaining a strong foothold in the regulated markets would remain a challenge for the company considering the intense competition it is likely to witness due to for its ‘Para III’ product portfolio. At Rs60, the stock is trading at 10.4x 9M FY07 annualized EPS of Rs5.7.