Is Alembic Pharmaceuticals a solid growth stock? - The numbers tells it is
04-05-2016 • About Alembic Pharmaceuticals (
$APLLTD) • By InTwits
Have you thought about Alembic Pharmaceuticals as a growth stock? Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Alembic Pharmaceuticals showed growth in the last financial year. The company's revenue surged on 53.1% in FY2016. EBITDA also increased considerably: 150% for the same period.
In the last 3 years the company showed fast revenue growth of 27.5% from FY2013 to FY2016 annually. EBITDA surged on 59.3% from FY2013 to FY2016 annually.
Alembic Pharmaceuticals ($APLLTD) financials for the last 5 years
| mln. INR | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 14,654 | 15,203 | 18,632 | 20,561 | 31,487 |
|---|
| Revenue growth, % | | 3.7% | 22.6% | 10.4% | 53.1% |
|---|
| SG&A, % | | | | | 7.76% |
|---|
| EBITDA | 2,260 | 2,490 | 3,577 | 4,030 | 10,060 |
|---|
| EBITDA growth, % | | 10.2% | 43.7% | 12.6% | 149.6% |
|---|
| EBITDA margin, % | 15.4% | 16.4% | 19.2% | 19.6% | 31.9% |
|---|
| Net Income | 1,301 | 1,653 | 2,355 | 2,829 | 7,194 |
|---|
| Net Income margin, % | 8.88% | 10.9% | 12.6% | 13.8% | 22.8% |
|---|
| |
| CAPEX | 613 | 860 | 820 | 2,236 | 3,036 |
|---|
| CAPEX/Revenue, % | 4.18% | 5.65% | 4.40% | 10.9% | 9.64% |
|---|
| Debt | 3,527 | 1,868 | 1,094 | 2,635 | 1,564 |
|---|
| Cash | 238 | 155 | 228 | 234 | 4,393 |
|---|
| Net Debt/EBITDA | 1.5x | 0.7x | 0.2x | 0.6x | -0.3x |
|---|
| |
| ROIC, % | 27.5% | 29.1% | 41.5% | 35.7% | 62.1% |
|---|
| ROE, % | 37.6% | 36.8% | 40.0% | 36.3% | 57.9% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. Alembic Pharmaceuticals's EBITDA margin surged on 12.3 pp from 19.6% to 31.9% in FY2016. In the last 3 years Alembic Pharmaceuticals showed fast EBITDA margin growth of 15.5 pp from 16.4% in FY2013 to 31.9% in FY2016.
Alembic Pharmaceuticals shows attractive ROIC at 62.1% for the last 12 months which assumes stable development model. Three years ago it was considerably lower at 29.1%. It's average level of ROIC for the last three years was 46.4%.
The company showed fast Net Income margin growth of 9 pp from 13.8% to 22.8% in FY2016. In the longer period Net Income margin surged on 11.9 pp from 10.9% in FY2013 to 22.8% in FY2016.
Alembic Pharmaceuticals operates at ROE of 57.9%. Average ROE for the last three years was 44.7%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.The company's CAPEX/Revenue was 9.64% in FY2016. CAPEX/Revenue surged on 3.99 pp from 5.65% in FY2013 to 9.64% in FY2016. It's average CAPEX/Revenue for the last three years was 8.31%.
Leverage (Debt)
Alembic Pharmaceuticals has negative net debt at -0.3x Net Debt/EBITDA - at the same time with high growth. In the longer period leverage dropped on 0.97x from 0.69x in FY2013 to -0.28x in FY2016.
Valuation vs. comparable companies
The market closed today at 10.9x EV/EBITDA for Alembic Pharmaceuticals which is 57.5% lower than 25.7x Pharmaceuticals peer group avearge calculated on the basis of 266 companies. The company trades at 15.7x P/E which is 70.2% lower than 52.5x Pharmaceuticals industry avearge calculated based on 22 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 15.7x EV/(EBITDA-CAPEX) which is 872% higher than 1.6x Pharmaceuticals peer group avearge calculated on the basis of 16 companies.
Management team
Chirayu Ramanbhai Amin is a CEO of Alembic Pharmaceuticals.
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, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Mangalam Drugs & Organics ($MANGALAM) | 16.6% | -18.2% | -2.1% | 79.8% | |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 39.9% | 40.4% | 42.4% | 70.2% | |
| Lyka Labs ($LYKALABS) | 41.9% | -25.7% | -22.6% | 68.7% | |
| Marksans Pharma ($MARKSANS) | 16.7% | 23.3% | 43.3% | 26.8% | |
| Torrent Cables ($TORRCABS) | 27.5% | 17.4% | -42.9% | 26.5% | |
| |
|---|
| Median (41 companies) | 16.6% | 14.9% | 12.6% | 8.6% | |
|---|
| Alembic Pharmaceuticals ($APLLTD) | | 3.7% | 22.6% | 10.4% | 53.1% |
Top companies by Gross margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | | 52.1% | 57.4% | 57.6% | |
| Omega Laboratories ($OMEGALAB) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (2 companies) | 46.9% | 26.1% | 28.7% | 28.8% | 0.0% |
|---|
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Divi'S Laboratories ($DIVISLAB) | 37.2% | 38.2% | 40.2% | 37.4% | |
| Hester Biosciences ($HESTERBIO) | | | | 32.9% | |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 40.8% | 44.3% | 44.9% | 29.2% | |
| Natco Pharma ($NATCOPHARM) | 21.5% | 23.2% | 24.9% | 26.2% | |
| Dr.Reddy'S Laboratories ($DRREDDY) | 25.8% | 22.9% | 25.1% | 23.2% | |
| |
|---|
| Median (53 companies) | 12.7% | 12.8% | 14.3% | 12.0% | |
|---|
| Alembic Pharmaceuticals ($APLLTD) | 15.4% | 16.4% | 19.2% | 19.6% | 31.9% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Claris Lifesciences ($CLARIS) | 58.1% | 42.9% | | 103.1% | |
| Wintac ($WINTAC) | | | | 22.8% | |
| Hester Biosciences ($HESTERBIO) | | | | 21.5% | |
| Ipca Laboratories ($IPCALAB) | 11.2% | 8.3% | 11.6% | 17.8% | |
| Natco Pharma ($NATCOPHARM) | 24.4% | 16.3% | 14.4% | 14.1% | |
| |
|---|
| Median (31 companies) | 8.2% | 8.3% | 5.8% | 6.0% | |
|---|
| Alembic Pharmaceuticals ($APLLTD) | 4.2% | 5.7% | 4.4% | 10.9% | 9.6% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Marksans Pharma ($MARKSANS) | -142.4% | 34.9% | 33.8% | 41.2% | |
| Jenburkt Pharmaceuticals ($JENBURPH) | 34.1% | 29.0% | 32.4% | 35.3% | |
| Abbott India ($ABBOTINDIA) | 29.6% | 26.9% | 30.5% | 34.2% | |
| Divi'S Laboratories ($DIVISLAB) | 30.6% | 30.4% | 32.3% | 30.5% | |
| Ngl Fine-Chem ($NGLFINE) | 9.3% | 17.9% | 22.4% | 27.5% | |
| |
|---|
| Median (63 companies) | 13.7% | 13.2% | 14.4% | 13.0% | 0.0% |
|---|
| Alembic Pharmaceuticals ($APLLTD) | 27.5% | 29.1% | 41.5% | 35.7% | 62.1% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Jubilant Life Sciences Limited ($JUBILANT) | 4.0x | 3.5x | 3.5x | 6.4x | |
| Shasun Pharmaceuticals ($SHASUNPHAR) | 2.8x | 4.5x | 6.0x | 6.2x | |
| Claris Lifesciences ($CLARIS) | 1.9x | 1.1x | 1.8x | 3.2x | |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 3.6x | 2.6x | 2.3x | 2.9x | |
| Neuland Laboratories ($NEULANDLAB) | 4.2x | 3.5x | 2.6x | 2.6x | |
| |
|---|
| Median (48 companies) | 1.5x | 1.4x | 0.5x | 0.0x | |
|---|
| Alembic Pharmaceuticals ($APLLTD) | 1.5x | 0.7x | 0.2x | 0.6x | -0.3x |
