RESEARCH :: COMPANY:: ALEMBIC LIMITED 
11TH Febuary, 2010 

                                                                COMPANY PROFILE

  Incorporated in the year 1907, Alembic Ltd. Is one of the most experienced manufacturers of bulk
BUY
drugs and pharmaceuticals formulation in human and animal healthcare.
It is among one of the top players in the pharmaceutical sector in India. The company has its
 
Approx price = Rs 47
presence in 75 international markets. The company filled 54 patent applications for API business .
Target price = Rs. 65
Estimated  EPS = Rs 2.80 The number of patents filed during the year for formulations was 11 totaling to 202.
Projected PE = 24-30 During the year, the total DMFs (Drug Masters Files) filled by the company are 32 and the total
Investment period = 12 months number of ANDAs (Abbreviated New Drug Application) filed by the company are 19.
Potential  Upside = 55%
FUTURE OUTLOOK:
STOCK  INFO (TTM Basis)

Sector   Pharma/Bulk    FY09 FY10*  FY11*

Drugs & Net Sales 1115.96 1241.94  1366.13
  FormlnLrg
Market cap(Rs cr) 634.20 Other Income 23.84 23.84  23.84
Face value 2.00 1139.8 1265.78  1389.97
  Total Income
Book value 24.44
EPS 1.15 Expenditure 1043.84 1137.78  1205.65
Cash EPS   3.61 EBITDA 95.96 128.00  184.32
Dividend 20%
 
Sales Growth -7.5% Interest 52.06 34.13  36.16
RONW 2.69%
 
Debt to equity 1.34 Profit Before Depreciation and
52 week H/L 56.3/29.6 Tax 43.9 93.87  148.16
Avg Daily  Vol 4.49 lacs Depreciation 38.31 42.88  47.16
Sensex 16111
BSE code  506235 Profit Before Tax 5.59 50.99  101.00
Promoter Holding 63.48% Tax ‐1.69 15.30  30.30
Management
  Chirayu R
Amin Profit After Tax 7.28 35.69  70.70
Incorporation 1907 Equity Share Capital 27.44 26.70  26.70
s 
Listed  
NSE/BSE
FII/MFs 8.04/5.90 Basic EPS 0.53 2.80  5.21
 
Cash EPS 3.32 5.79  8.69
Prepared By-
Tanisha Jolly Operating Profit Margins 8.60 10.31  13.62
Research associate Net Profit Margins 0.65 2.87  5.16
 
Tanisha.jolly@fairwealth.in *Estimated

 
Reviewd By-
Prakash Chandra Pandey
 
AVP-Portfolio Management
  prakash.pandey@fairwealth.in

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API’s (Active Pharmaceutical Ingredients)

APIs business is a very important segment of the company. The company has an exclusive facility for manufacturing APIs
consisting of independent manufacturing blocks for Macrolides, NSAIDs and other drugs. API manufacturing facility at panelav
has successfully undergone inspection of USFDA and EDQM. International business is the main contributor for higher sales
growth in API. Sales of API to regulated markets increased by 111% which lead to an overall API sales growth to an impressive
54%.

FORMULATIONS
Alembic manufactures more than 150 formulations representing therapeutic segments and dosage forms. The formulations
accounts for 65% of the company’s total business and has its manufacturing locations in Vadodara, Panelav and Baddi. The
formulations business is segregated as:
9 International Business division: The company posted an impressive 44% growth in its international business divison.
9 Domestic Formulation Business: It has been reorganized in different groups and comprises of 15 marketing divisions.
It is known as a leading company in Macrolides as well as other acute therapies. The company has strengthened its
presence across speciality therapies such as Diabetology, Cardiology and Gynaecology.During the year, the company
launched 34 new products across various therapeutic segment which contributed 3.54% of total domestic branded
formulations sales.
9 Veterinary Business: It includes manufacturing of Antibiotics, Antimicrobal Indictable, Orals, Speciality Injectables, Boli,
Feed Supplements, Poultry. During the year the division grew by 12%
 
RESEARCH & DEVELOPMENT
The total investments made in the Research and Development in the FY09 was Rs. 47.7 Crore, which was 4.21% of the
consolidated Net Sales.
The R&D in the company are focused on 3 broad categories:
9 Chemistry and Synthesis
9 Formulations Development
9 Contract / Collaborated Research
The company has acquired the proficiency to develop a wide range of pharmaceuticals across the value chain- from complex
APIs to value-added difficult to develop formulations. The company has expertise in macrolides and ketolides.
Alembic is one of the two organizations in India to produce phosgene based chemicals. The manufacturing facilities of the
company have successfully passed the inspections from regulatory bodies across the world and USFDA status confirmed to both
API and Solid dosage facilities stand as a testimony. The research labs of the company are well equipped to develop new
products and formulations at a competitive cost. In the international generic markets, the low cost of the products and strong
intellectual property are going to be the key drivers for the company’s growth. Alembic has shown excellence in the areas of the
development and manufacturing.
The company has also obtained ISO 9001 and ISO 14001 certification and adheres to the Standard Operating Practices in the
manufacturing and operating activities.
The Alembic Research Centre focused on the cost reduction projects for molecules which are going off-patented in the regulated
markets.
The R&D continues to develop and help launch high specialty products in the domestic market across different therapeutic
segments.
Alembic’s current focus on drug delivery research is in the area of oral-controlled release-system.

NEW INVESTMENTS

9 The company has invested Rs. 3 crores towards 50% equity capital in Incozen Therapeutics Pvt. Ltd. It is engaged in
the R&D activities in the area of Drug Discovery and Clinical Development, Developing new chemical Entities, Contract
Research independently. Further, the company will be benefited from these activities.
9 The company also invested in the equity of Rhizen Pharmaceuticals SA in Switzerland.

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FINANCIAL HIGHLIGHTS DURING THE YEAR

Year ended Year ended Growth/ (De-

31-03-2009 31-03-2008 Growth)%
Sales
Formulations
Domestic 55,419 59,774 -7.3
Exports 4,765 4,666 2.1
Regulatory 7,200 6,986 3.1
API
Domestic 12,411 11,247 10.4
Exports 7,444 6,034 23.4
Regulatory 25,095 11,916 110.6
Exports Incentives and R&D Income 1,033 2,038 -49.3
Grand Total 1,13,367 1,02,661 10.4
Source: Company’s Annual Report

SUBSIDIARY
During the year, the company formed a wholly owned subsidiary, Alembic Global Holding SA in Neuchatel, Switzerland with the
objective of purchase, sale, packaging, manufacturing, research and development of pharmaceutical products, intermediaries
and raw materials as well as acquisitions and management of intellectual property.

RESULT ANALYSIS (In crores)

   Q3FY10  Q3FY09  Var%  Q2FY10  Var% 

Total Income  265.18  282.21  ‐17.03  272.82  ‐7.64 
Expenditure  237.54  260.97  ‐23.43  238.98  ‐1.44 
PBIDT  27.64  21.24  6.4  33.84  ‐6.2 
PBDT  20.87  10.1  10.77  24.83  ‐3.96 
PBT  10.01  0.34  9.67  14.09  ‐4.08 
Tax  0.97  ‐1.74  2.71  2.25  ‐1.28 
Net Profit  9.04  2.08  6.96  11.84  ‐2.8 

The total Income declined by 17.03% on Y-O-Y basis to Rs 265.81 crore in the Q3FY10 as against Rs 282.21 crore during the
previous Q3FY09.On Q-o-Q basis, the total income declined by 7.64%. Net profit of Alembic increased by 6.96% on Y-O-Y
basis to Rs 9.04 crore in the Q3FY10 as against Rs 2.08 crore during the previous Q3FY09. On Q-o-Q basis, the net profit
declined by 2.8%.

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PEER ANALYSIS

On TTM Basis (Figures in Crores)

   Alembic Sun Pharma Cipla  Ranbaxy Labs  Piramal Health 

Market Capitalization 634.70 32490.91 27675.96 22111.99  8093.52 
Sales 1022.87 2513.55 5195.91 4011.01  2480.86 
PBIDT 82.64 994.73 1289.69 ‐1777.26  497.36 
Net Profit 16.33 1005.94 993.81 456.29  343.61 
EPS 1.21 48.57 12.38 10.85  16.44 
EV/EBITDA 13.24 31.41 22.15 ‐13.45  18.20 
Face Value 2.00 5.00 2.00 5.00  2.00 
Equity 26.98 103.56 160.58 210.21  41.80 
P/E 38.88 32.30 27.84 48.47  23.56 
EV/Sales 1.07 12.43 5.50 5.96  3.65 
Operating Profit Margin 0.08 0.40 0.25 ‐0.44  0.20 
PAT Margin 0.02 0.40 0.19 0.11  0.14 
 

Last Five Years Performance

FINANCIALS: ALEMBIC (In crores) 
   2008‐09  2007‐08  2006‐07  2005‐06  2004‐05 
Net Sales(net of stk adjust.) 1115.96  1008.99  671.32  646.43  529.1 
Other Income 23.84  41.74  19.07  22.85  15.64 
Total Income 1139.8  1050.73  690.39  669.28  544.74 
Expenditure 1043.84  866.74  564.89  542.18  452.74 
EBITDA 95.96  183.99  125.5  127.1  92 
Interest 52.06  37.62  25.86  14.85  16.43 
Profit Before Depreciation and 43.9  146.37  99.64  112.25  75.57 
Tax
Depreciation 38.31  32.77  29.06  28.76  25.57 
Profit Before Tax 5.59  113.6  70.58  83.49  50 
Tax ‐1.69  1.41  ‐0.1  4.97  ‐2.04 
Profit After Tax 7.28  112.19  70.68  78.52  52.04 
Equity Share Capital 27.44  27.69  27.69  27.69  27.69 
Basic EPS 0.53  8.1  5.1  5.67  3.75 
Cash EPS 3.32  10.47  7.2  7.74  5.6 
Operating Profit Margins 8.60  18.24  18.69  19.66  17.39 
Net Profit Margins 0.65  11.12  10.53  12.15  9.84 

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BALANCE SHEET: ALEMBIC (In crores) 
   2008‐09  2007‐08  2006‐07  2005‐06  2004‐05 
Net worth 326.99 341.36 384.92 336.23 273.66

Loans- term 319.58 307.96 109.43 90.34 132.66

Loans - working capital 155.23 115.51 225.95 89.66 70.63

Deferred tax liability 6.41 -4.83 39.78 39.79 40.68

TOTAL 808.21 760.00 760.08 556.02 517.63

Net block including WIP 411.94 388.57 356.66 315.76 315.32
Investments 8.45 14.06 20.81 24.19 28.68

Net working capital 387.82 357.37 382.61 216.07 173.63

Deferred revenue expenses 0.00 0.00 0.00 0.00 0.00

TOTAL 808.21 760.00 760.08 556.02 517.63

ANALYSIS & REPORT

Why to invest in shares of Alembic Ltd.?

SECTOR:

Pharma is one sector which promises to grow in both Developed and Developing Markets. Global Pharma Industry grew at a pace of
6% in 2009 to reach an estimated figure of USD 725 billion. Developed economies like US, Japan and Europe which account for 85%
of global Pharma markets grew by 4% Emerging markets continue to witness 12%+ growth.
India though accounts for 2% of the global markets, it is ahead of many developed countries in terms of ANDA filing, Drug Master file
registrations, Contract Research and Manufacturing(CRAMS), Approved Facilities for manufacturing and Research.
Indian companies are already making great strides in the global generic markets and API’s, and the sector continues to hold great
potential. The global pharmaceutical market is forecasted to touch $ 929 billion by 2012.The current spending on healthcare(public
and private) is estimated to increase to 10% GDP by 2016.The pharmaceutical market in India is expected to grow around 12% and
to be valued around USD 20 billion by 2015. The market continues to be dominated by acute therapies; however chronic segments
such as Cardiovascular, Diabetes, Central Nervous System and speciality segments like Oncology are growing faster than the
market.

COMPANY:.
• Alembic’s prescription share is 1.6% and ranks as the 14th most prescribed company by the Indian doctors.
• In therapeutic segment, Macrolides accounts for 37% of the market share and ranks no.1 in this category.
• The company’s brands are outpacing the market such as Megaclav, the market growth was 33% whereas the brand’s growth
was 222%. The other brand, Strox’s growth was 111%.
•
th
One of the brand of the company named Azithral recorded a 30% growth and now has become 27 top selling brand in the
country.
• The company’s Chronic Therapy segment will continue to be a key segment for domestic formulations business in the coming
years.
• The company is looking forward to grow its footprint in the regulated market to increase generic usage in the healthcare
systems.

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FUNDAMENTALS:

• The company’s sales grew by 10.4% to reach Rs.1,115.37 crores over Rs.1,008 crore in FY09.
• The company posted an impressive 44% growth in its international business division and 7.3% decrease in domestic
formulations business.
• The company’s Sales in regulated market grew 71% from Rs.189 cr to Rs. 323 cr which contributes 29% to the total
revenues.
• Net profit of Alembic increased by 6.96% on Y-O-Y basis to Rs 9.04 crore in the Q3FY10 as against Rs 2.08 crore
during the previous Q3FY09. On Q-o-Q basis, the net profit declined by 2.8% to Rs. 9.04cr as against Rs. 11.84 cr
• The 34 new products launched contributed 3.54% of the total domestic branded formulations sales.
• Generic sales in regulated markets increased by 3 per cent from Rs.70 cr to Rs.72 cr.

Notes: Figures and graph sourced from www.bseindia.com , capital market and annual report (2008‐09). 
 
END
FUNDAMENTAL ANALYSTS DESIGNATION CONTACT NO.

0124 -3024862
Rajesh Gupta Chief Investment Officer Rajesh.gupta@fairwealth.in
Research@fairwealth.in
Prakash Chandra Pandey AVP-PMS 0124-3024864
Prakash.pandey@fairwealth.in
Tanisha Jolly Research Associate 0124 – 3024840
Tanisha.jolly@fairwealth.in
0124 – 3024874
Varun Khanna Research Associate
Varun.khanna@fairwealth.in
0124 – 3024840
Shashi Srivastava Research Associate
Shashi.s@fairwealth.in
0124-3024869
Shakti Rajpal Research Associate
Shakti.rajpal@fairwealth.in
0124-3024869
Suvarna Binjola Research Associate
Suvarna.binjola@fairwealth.in

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