Neutral Alembic Pharma; target of Rs 1070: Motilal Oswal

Motilal Oswal recommended Neutral rating on Alembic Pharma with a target price of Rs 1070 in its research report dated January 19, 2021.

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Motilal Oswal’s research report on Alembic Pharma

Alembic Pharma (ALPM) missed 3QFY21 earnings, weighed by lower-thanexpected sales in the US. The adverse impact of lower price of Sartans in the US was offset, to some extent, by a) healthy sales growth in the Domestic Formulation (DF) / Non-US / API segment and b) stable other operating expenses. n Physical inspections by the USFDA across sites for the industry in India are delayed due to restrictions on international travel. However, ALPM may face the inspection earlier (over the next 3–6M) as it has filed for products on the shortage list. n We lower our PAT estimate by 3%/4% for FY22/FY23, factoring in higher competition for Sartans and delay in approvals for injectable products. We continue to value ALPM at 19x (in line with its five-year average) 12M forward earnings to arrive at TP of INR1,070. Maintain Neutral.

Outlook

We value ALPM at 19x 12M forward earnings and arrive at TP of INR1,070. Maintain Neutral.

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