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Alembic Pharmaceuticals demonstrated fast growth over the last few years. Will the growth continue?

05-05-2014 • About Alembic Pharmaceuticals ($APLLTD) • By InTwits

Have you thought about Alembic Pharmaceuticals as a growth stock? Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story


Alembic Pharmaceuticals showed fast growth in the last financial year. Alembic Pharmaceuticals's revenue surged on 22.6% in FY2014. The growth also happened in EBITDA of 43.7% for the same period.

In the longer period Alembic Pharmaceuticals showed fast revenue growth of 15.8% from FY2011 to FY2014 annually. EBITDA surged on 30.7% from FY2011 to FY2014 annually.

Alembic Pharmaceuticals ($APLLTD) financials for the last 5 years

mln. INR FY2010 FY2011 FY2012 FY2013 FY2014
Revenue25,03512,01314,65415,20318,632
Revenue growth, %-52.0%22.0%3.7%22.6%
SG&A, %
EBITDA01,6042,2602,4903,577
EBITDA growth, %-100.0%40.9%10.2%43.7%
EBITDA margin, %0%13.4%15.4%16.4%19.2%
Net Income08541,3011,6532,355
Net Income margin, % 0%7.11%8.88%10.9%12.6%
 
CAPEX0625613860820
CAPEX/Revenue, %0%5.21%4.18%5.65%4.40%
Debt03,2793,5271,8681,094
Cash063238155228
Net Debt/EBITDA2.0x1.5x0.7x0.2x
 
ROIC, %27.5%29.1%41.5%
ROE, %37.6%36.8%40.0%

Profitability and return on investment


Margin expansion supported EBITDA growth. Alembic Pharmaceuticals showed fast EBITDA margin growth of 2.80 pp from 16.4% to 19.2% in FY2014. If we look for the longer period Alembic Pharmaceuticals's EBITDA margin surged on 5.80 pp from 13.4% in FY2011 to 19.2% in FY2014.

We call Alembic Pharmaceuticals an attractive growth stock as together with the growth it delivers high ROIC at 41.5%. During the last three years it surged - it was in FY2011. For the last three years the average ROIC was 32.7%.

Alembic Pharmaceuticals's Net Income margin surged on 1.70 pp from 10.9% to 12.6% in FY2014. If we look for the longer period Net Income margin surged on 5.50 pp from 7.10% in FY2011 to 12.6% in FY2014.

Alembic Pharmaceuticals operates at ROE of 40.0%. It's average level of ROE for the last three years was 38.1%.

Capital expenditures (CAPEX)


The company's CAPEX/Revenue was 4.40% in FY2014. CAPEX/Revenue dropped on 0.807 pp from 5.21% in FY2011 to 4.40% in FY2014. It's average level of CAPEX/Revenue for the last three years was 4.74%.

Leverage (Debt)


Having such a fast growth profile the company keeps low debt level at 0.2x Net Debt/EBITDA. In the longer period the company showed big decline in leverage of 1.76x from 2.01x in FY2011 to 0.24x in FY2014.

Valuation vs. comparable companies


The market closed today at 15.3x EV/EBITDA for Alembic Pharmaceuticals which is 10.4% lower than 17.1x Pharmaceuticals peer group avearge calculated on the basis of 266 companies. At the end of trading day today Alembic Pharmaceuticals traded at 22.9x P/E which is 10.7% lower than 25.7x Pharmaceuticals peer group avearge calculated on the basis of 24 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Alembic Pharmaceuticals traded at 19.9x EV/(EBITDA-CAPEX) which is higher vs. -3.4x Pharmaceuticals peer group avearge calculated on the basis of 20 companies.

Management team


Alembic Pharmaceuticals is run by Chirayu Ramanbhai Amin as a CEO.

Peers in Pharmaceuticals


Below you can find Alembic Pharmaceuticals benchmarking vs. other companies in Pharmaceuticals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top
Granules India ($GRANULES)-68.4%37.6%16.9%43.4%
Sanjivani Paranteral ($SANJIVIN)1.2%5.8%
 
Median (2 companies)-68.4%37.6%9.1%24.6%
Alembic Pharmaceuticals ($APLLTD)-52.0%22.0%3.7%22.6%


Top companies by Gross margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%
 
Median (1 company)0.0%0.0%0.0%


Top companies by EBITDA margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top
Granules India ($GRANULES)4.1%13.7%13.5%12.8%14.5%
Sanjivani Paranteral ($SANJIVIN)8.8%8.3%7.5%
 
Median (2 companies)4.1%13.7%11.2%10.6%11.0%
Alembic Pharmaceuticals ($APLLTD)13.4%15.4%16.4%19.2%


Top companies by CAPEX/Revenue, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top
Granules India ($GRANULES)0.9%5.3%8.8%15.2%24.3%
 
Median (1 company)0.9%5.3%7.3%15.2%24.3%
Alembic Pharmaceuticals ($APLLTD)5.2%4.2%5.7%4.4%


Top companies by ROIC, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top
Granules India ($GRANULES)12.8%15.8%14.2%18.4%
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%
Godavari Drugs ($GODAVARI)
Sanjivani Paranteral ($SANJIVIN)14.2%13.0%
 
Median (4 companies)12.8%14.2%13.0%9.2%
Alembic Pharmaceuticals ($APLLTD)27.5%29.1%41.5%


Top companies by Net Debt / EBITDA

 FY2010 FY2011 FY2012 FY2013 FY2014
Top
Granules India ($GRANULES)2.3x2.0x2.2x2.4x2.7x
Godavari Drugs ($GODAVARI)1.7x0.0x
Sanjivani Paranteral ($SANJIVIN)4.3x4.2x0.0x
 
Median (3 companies)2.3x2.0x3.3x2.4x0.0x
Alembic Pharmaceuticals ($APLLTD)2.0x1.5x0.7x0.2x


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