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					Q 4 F Y 1 2 R e s u l t U p d a t e – 2 M a yn 2 0 1 i n g C o v e r a g e

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                                                                                                                           Alembic Pharma Ltd



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                                                                                                                                                                       Results are in-line with expectations




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                                                                                Recommendation                                                                BUY




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                                                                                CMP                                                                          Rs. 54    Total revenues grew by 14.7% yoy at Rs 339.5 cr. EBITDA margin has improved




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                                                                                                                                                                       by 290 bps yoy however, declined by 580 bps qoq at 12.1%.
                                                                                Target Price                                                                 Rs. 86

                                                                                Sector                                                     Pharmaceuticals             Key Highlights
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                                                                                                                                                                        Sequential results are not comparable due to seasonality factor. Q4 is
                                                                                Stock Details
                                                                                                                                                                           seasonally weak quarter for the company
                                                                                BSE Code                                                                    533573
                                                                                                                                                                            Exports drove the sales growth for the quarter as well as for FY12. During
                                                                                NSE Code                                                                    APLLTD
                                                                                                                                                                             the quarter exports grew by 28.1% yoy as compared to domestic growth of
                                                                                Bloomberg Code                                                         ALPM IN
                                                                                                                                                                             7.5% yoy. For FY12 exports reported impressive growth of 41.2% as
                                                                                Market Cap (Rs cr)                                                            1025
                                                                                                                                                                             compared to 11.3% domestic growth.
                                                                                Free Float (%)                                                                25.9
                                                                                                                                                                            During the quarter R&D expenses have increased substantially to Rs 22.1 cr
                                                                                52- wk HI/Lo (Rs)                                                            60/34
                                                                                                                                                                             (6.5% of sales; includes one-time filing cost of NDA of Rs 5 cr) as against Rs
                                                                                Avg. volume BSE (Quarterly)                                                 78,070
                                                                                                                                                                             9.1 cr (2.4%) in Q3FY12 and Rs 15.7 cr (5.3%) in Q4FY11, on account of
                                                                                Face Value (Rs)                                                                2.0
                                                                                                                                                                             higher filings for European and Brazil regions and more Para IV and 505 (b)
                                                                                Dividend (FY 12)                                                              70%
                                                                                                                                                                             (2) filings. We have also incorporated higher R&D cost for future years
                                                                                Shares o/s (Crs)                                                              18.9           (4.8% of sales in FY13E and FY14E as compared to 4.0% in FY12)
                                                                                Relative Performance                          1Mth         3Mth              1Yr
                                                                                                                                                                            The company has filed four ANDAs and three DMFs during the quarter
                                                                                Alembic                                       13.0%        42.9%             NA
                                                                                                                                                                             taking the cumulative filings to 45 ANDAs and 62 DMFs. It has received two
                                                                                Sensex                                        -0.5%        0.7%             -8.8%
                                                                                                                                                                             approvals as well in Q4FY12 taking the total approvals to 19.
                                                                                                                                                                            Management expects domestic formulations growth to be strong however
                                                                                                                                                                             it would be limited by current capacity constraints. The management
                                                                                                                                                                             expect 15% growth in FY13 however it also feels that FY14 would be the
                                                                                                                                                                             turnaround year in terms of growth as new capacity would ease the
                                                                                                                                                                             current constraints and it would be able to take the full benefit of
                                                                                                                                                                             increasing demand
                                                                                Shareholding Pattern                                                   st
                                                                                                                                                  31 Mar 12            Valuation & Recommendation
                                                                                Promoters Holding                                                      74.1
                                                                                                                                                                       For FY12-14, we expect Alembic Pharma’s revenues to grow at 15.6%. However,
                                                                                Institutional (Incl. FII)                                                      7.9     PAT is expected to grow faster i.e. 25.0% during the same period on account of
                                                                                Corporate Bodies                                                               1.6     favorable change in product mix, shift from API to formulations, launch of new
                                                                                Public & others                                                               16.4     products and higher economies of scale. We had initially recommended
                                                                                                                                                                                                nd
                                                                                                                                                                       Alembic Pharma on 22 March 2012 at Rs 43. Since then the stock has given
                                                                                Runjhun Jain
                                                                                                                                                                       26% returns. We maintain our “BUY” with a revised target price of Rs. 86
                                                                                Senior Research Analyst
                                                                                022 3926 8177                                                                          (earlier Rs 97) indicating a potential upside of 59% over next two years. Major
                                                                                runjhun.jain@nirmalbang.com                                                            reason for revision in numbers is slow down in FY13 numbers due to constraints
                                                                                                                                                                       in capacity and higher R&D expenses.
                                                                                Year                                     Sales             Growth                  EBITDA        Margin         PAT         Margin       Adj EPS      P/E
                                                                                                                                                                                                                                                 RoE (%)
                                                                                Consolidated                            (Rs cr)              (%)                   (Rs cr)        (%)          (Rs cr)       (%)          (Rs)        (x)
                                                                                FY 11A                                  1192.4             5.3%                     157.2        13.2%         85.4          7.2%         4.5         12.0        28.8%
                                                                                FY 12A                                  1457.2             22.2%                    216.4        14.8%         130.1         8.9%         6.9         7.9         32.9%
                                                                                FY 13E                                  1656.9             13.7%                    251.8        15.2%         152.9         9.2%         8.1         6.7         30.0%
                                                                                FY 14E                                  1948.6             17.6%                    315.7        16.2%         203.4         10.4%        10.8        5.0         30.8%


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Q 4 F Y 1 2 R e s u l t U p d a t e – 2 M a yn 2 0 1 i n g C o v e r a g e

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                                                                                                                                          Quarterly Result




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                                                                                                      Consolidated (Rs cr)                          Q4FY12     Q3FY12      qoq     Q4FY11         yoy         FY12           FY11         yoy




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                                                                                                      Total Revenues                                 339.5      382.5     -11.2     296.0         14.7       1461.3      1195.4          22.2
                                                                                                      Cost of Materials                              153.0      189.4     -19.2     150.0          2.0        707.9          590.4       19.9
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                                                                                                      Staff cost                                      43.1       39.8       8.3      41.1          5.0        168.5          141.5       19.1
                                                                                                      Other Exps                                     102.3       84.8      20.6      77.8         31.4        364.5          303.3       20.2
                                                                                                      Total Expenses                                 298.4      314.0      -5.0     268.8         11.0       1240.9      1035.2          19.9
                                                                                                      EBITDA                                          41.1       68.5     -40.0      27.2         51.1        220.4          160.3       37.5
                                                                                                      margins                                        12.1%      17.9%                9.2%                    15.1%        13.4%
                                                                                                      Depreciation                                     8.9        8.1      10.3        7.8        13.8         33.7           29.6       13.7
                                                                                                      EBIT                                            32.2       60.4     -46.7      19.4         66.3        186.8          130.7       42.9
                                                                                                      Interest                                         5.4        7.0     -22.9        6.4       -15.4         26.2           23.9        9.7
                                                                                                      Other income                                     0.1        0.1       0.0        0.0       333.3          0.4            0.1      450.0
                                                                                                      PBT                                             26.9       53.5     -49.7      13.0        106.8        161.0          106.9       50.7
                                                                                                      Tax                                              6.6        9.3     -28.8        2.8       141.1         30.9           21.5       43.8
                                                                                                      Tax rate                                       24.6%      17.4%               21.1%                    19.2%        20.1%
                                                                                                      PAT                                             20.3       44.2     -54.1      10.3         97.6        130.1           85.4       52.4
                                                                                                      Equity Capital                                  37.7       37.7                37.7                      37.7           37.7
                                                                                                      FV                                               2.0        2.0                  2.0                      2.0            2.0
                                                                                                      EPS                                              1.1        2.3     -54.1        0.5        97.6          6.9            4.5       52.4
                                                                                                                                          Revenue Breakup
                                                                                                      Particulars (Rs cr)                           Q4FY12     Q3FY12      qoq     Q4FY11         yoy         FY12           FY11         yoy
                                                                                                        Formulations                                 252.6      272.8     -7.4%     226.4       11.6%        1081.1          917.4      17.9%
                                                                                                        Domestic                                     184.5      198.8     -7.2%     157.4       17.2%         782.6          693.4      12.9%
                                                                                                        ROW                                           17.7       15.6    13.7%       13.7       29.5%          56.7           50.2      13.1%
                                                                                                        Regulatory                                    50.4       58.5    -13.8%      55.3        -8.9%        241.8          173.8      39.1%
                                                                                                        API                                           87.4      108.6    -19.6%      66.3       31.7%         373.4          274.4      36.1%
                                                                                                        Domestic                                      19.2       18.7     2.6%       32.1       -40.2%         94.2           94.5      -0.3%
                                                                                                        Export                                        68.1       89.9    -24.2%      34.2       99.2%         279.2          179.9      55.2%
                                                                                                        Export Incentive                               2.4        1.4    74.3%         5.0      -52.6%         13.3           14.9     -10.4%
                                                                                                        Gross Sales                                  342.3      382.8    -10.6%     297.7       15.0%        1467.9      1206.6         21.6%

                                                                                                                                          Change in estimates
                                                                                                                                          We are revising down our numbers on account of higher R&D cost and capacity constraints in
                                                                                                                                          FY13, limiting the company to scale up its operations and to take full benefit og higher demand.

                                                                                                      Change in estimates                                                  FY13E                                      FY14E
                                                                                                                                                                 New        Old      % change        New               Old           % change
                                                                                                      Sales                                                     1656.9    1674.9       -1.1%        1948.6            1978.5          -1.5%
                                                                                                      PAT                                                       152.9      172.3      -11.3%         203.4            227.6           -10.6%



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Q 4 F Y 1 2 R e s u l t U p d a t e – 2 M a yn 2 0 1 i n g C o v e r a g e

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                                                                             Financials




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                                                                              P&L (Rs. Cr)                                    FY11A           FY12        FY13E      FY14E    Balance Sheet (Rs Cr)   FY11A     FY12    FY13E    FY14E




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                                                                              Net Sales                                      1192.4         1457.2       1656.9     1948.6    Share Capital             37.7    37.7     37.7     37.7
                                                                              % change                                         5.3%         22.2%        13.7%      17.6%     Reserves & Surplus       259.0   357.3    472.1    623.4
                                                                              EBITDA                                           157.2         216.4        251.8      315.7    Net Worth                296.7   395.0    509.8    661.1
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                                                                              EBITDA margin (%)                               13.2%         14.8%        15.2%      16.2%     Total Loans              327.9   350.0    347.9    317.9
                                                                              Depn & Amort                                      29.6          33.7         41.3       45.0    Net Deferred Tax Lia       5.4      9.5     9.5      9.5
                                                                              Operating income                                 127.6         182.7        210.5      270.7    Total Liabilities        630.0   754.5    867.3    988.6
                                                                              Interest                                          23.9          26.2         24.4       22.3    Net Fixed Assets         272.0   301.2    371.2    380.1
                                                                              Other Income                                        3.1           4.5          5.0        5.8   Capital WIP               26.5    23.7     12.4      3.5
                                                                              PBT                                              106.9         161.0        191.1      254.3    Investments                3.3     3.3      3.3      3.3
                                                                              Tax                                               21.5          30.9         38.2       50.9    Cash & Bank                6.3    47.1      4.7     41.6
                                                                              EO                                                  0.0           0.0          0.0        0.0   Inventories              219.2   258.7    269.2    316.6
                                                                              Reported PAT                                      85.4         130.1        152.9      203.4    Debtors                  202.0   199.3    276.1    324.8
                                                                              Adj PAT                                           85.4         130.1        152.9      203.4    Other CA                 114.4   182.4    165.7    194.9
                                                                              Sh o/s - Diluted                                  18.9          18.9         18.9       18.9    CL & Prov                213.6   262.4    235.3    276.1
                                                                              Adj EPS                                             4.5           6.9          8.1      10.8    Net CA                   328.3   425.2    480.4    601.7
                                                                              EPS growth (%)                                131.3%          52.4%        17.5%      33.0%     Total Assets             630.0   753.3    867.3    988.6
                                                                              Cash EPS                                            6.1           8.7        10.3       13.2    Cash Flow (Rs. Cr)      FY11A     FY12    FY13E    FY14E
                                                                              Quarterly (Rs Cr)                             June.11        Sept.11       Dec.11     Mar.12    Operating Cash Flow
                                                                              Net Sales                                        343.4         394.5        381.7      337.7    Op CF bef tax & WC      162.9    216.4    251.8    315.7
                                                                              EBITDA                                            50.4          60.5         68.5       41.1    Change in WC            -48.9    -56.1    -97.7    -84.3
                                                                              Dep & Amorz                                         8.2           8.5          8.1        8.9   Tax                     -17.8    -31.2    -38.2    -50.9
                                                                              Operating Income                                  42.2          52.0         60.4       32.2    CF from Operation        96.2    129.0    115.9    180.5
                                                                              Interest                                            6.8           7.1          7.0        5.4   Investing Activities
                                                                              Other Inc.                                          0.5           1.1          0.9        2.0   Capex                    -62.4   -60.0    -100.0    -45.0
                                                                              PBT                                               35.5          45.0         53.5       26.9    Inv & Oth Income           5.5     4.4       5.0      5.8
                                                                              Tax                                                 7.9           7.0          9.3        6.6   CF from Investing        -56.8   -55.6     -95.0    -39.2
                                                                              EO                                                  0.0           0.0          0.0        0.0   Financing
                                                                              Adjusted PAT                                      27.6          38.0         44.2       20.3    Diviend Paid             -18.9   -30.7     -39.2    -52.1
                                                                              EPS (Rs.)                                           1.5           2.0          2.3        1.1   Sh Cap & Premium          11.0     0.0       0.0      0.0
                                                                               Ratios                                         FY11A           FY12        FY13E      FY14E    Interest Paid            -27.4   -26.2     -24.4    -22.3
                                                                              EBITDA margin (%)                               13.2%          14.8%        15.2%      16.2%    Loans & Others           -12.9    24.3       0.2    -30.0
                                                                              Adj PAT margin (%)                                7.2%          8.9%         9.2%      10.4%    CF from Financing        -48.2   -32.7     -63.3   -104.4
                                                                              PAT Growth (%)                                 131.3%          52.4%        17.5%      33.0%    Net Chg. in Cash          -8.8    40.8     -42.4     36.9
                                                                              Price Earnings (x)                                12.0            7.9          6.7        5.0   Cash at beginning         15.1     6.3      47.1      4.7
                                                                              ROE (%)                                         28.8%          32.9%        30.0%      30.8%    Cash at end                6.3    47.1       4.7     41.6
                                                                              ROCE (%)                                        16.6%          20.1%        19.9%      22.4%    Per Share Data          FY11A    FY12     FY13E    FY14E
                                                                              Debt/Equity Ratio (x)                               1.1           0.9          0.7        0.5   Adj EPS                    4.5     6.9       8.1     10.8
                                                                              Price/BV (x)                                        3.5           2.6          2.0        1.6   BV per share              15.7    21.0      27.0     35.1
                                                                              EV / Sales                                          1.1           0.9          0.8        0.7   Cash per share             0.5     2.7       0.4      2.4
                                                                              EV / EBITDA                                         8.6           6.1          5.4        4.1   Dividend per share         1.0     1.4       1.8      2.4




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Q 4 F Y 1 2 R e s u l t U p d a t e – 2 M a yn 2 0 1 i n g C o v e r a g e

                                                                             tiating C overage
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                                                                                                                        Alembic Pharma Ltd



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                                                                                   Disclaimer:

                                                                                   This Document has been prepared by Nirmal Bang Research (A Division of Nirmal Bang Securities PVT LTD). The information, analysis and
                                                                                   estimates contained herein are based on Nirmal Bang Research assessment and have been obtained from sources believed to be reliable. This
                                                                                   document is meant for the use of the intended recipient only. This document, at best, represents Nirmal Bang Research opinion and is meant for
                                                                                   general information only. Nirmal Bang Research, its directors, officers or employees shall not in anyway be responsible for the contents stated
                                                                                   herein. Nirmal Bang Research expressly disclaims any and all liabilities that may arise from information, errors or omissions in this connection. This
                                                                                   document is not to be considered as an offer to sell or a solicitation to buy any securities. Nirmal Bang Research, its affiliates and their employees
                                                                                   may from time to time hold positions in securities referred to herein. Nirmal Bang Research or its affiliates may from time to time solicit from or
                                                                                   perform investment banking or other services for any company mentioned in this document.

                                                                                                                                        Nirmal Bang Research (Division of Nirmal Bang Securities Pvt Ltd)
                                                                                                                                                        B-2, 301/302, Marathon Innova,
                                                                                                                                                         Opp. Peninsula Corporate Park
                                                                                                                                                          Off. Ganpatrao Kadam Marg
                                                                                                                                                       Lower Parel (W), Mumbai-400013
                                                                                                                                                       Board No : 91 22 3926 8000/8001
                                                                                                                                                               Fax : 022 3926 8010




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