Alembic Ltd Buy Call: Abhishek Jain, StocksIdea.com

Alembic Pharmaceuticals LimitedEstablished in 1907, Alembic Pharmaceuticals Limited is one of the leading pharmaceutical companies in India. The Company is vertically integrated with the ability to develop, manufacture and market pharmaceutical products, pharmaceutical substances and Intermediates. Alembic is the market leader in the Macrolides segment of anti-infective drugs in India. Alembic’s manufacturing facilities are located in Vadodara and Baddi in Himachal Pradesh. The plant at Vadodara has the largest fermentation capacity in India. The Panelav facility houses the API and formulation manufacturing (both US FDA approved) plants. The plant at Baddi, Himachal Pradesh manufactures formulations for the domestic and non-regulated export market. The company has a state of the art Research Centre at Vadodara.

Products & Services—

Company has presence in various areas like – Active pharmaceuticals ingredients, bulk pharma chemicals, formulations, Hearbal neutraceuticals, contract / collaborated research services and veterinary.

API's continue to make up a significant part of the operations for Alembic Pharmaceuticals Limited. The fermentation based APIs are manufactured at its main manufacturing facility exceeding 3 million square meter. This ISO-9002 & ISO14001 accredited facility also houses the central R&D (microbial & chemical) set-up and Quality Assurance activity. Alembic Pharmaceuticals has an exclusive facility for manufacturing synthetic APIs, consisting of independent manufacturing blocks for Macrolides, NSAIDs and other drugs. The API manufacturing facility at panelav has successfully under gone inspection of USFDA and EDQM. Bulk pharma chemicals—the synthetic BPC business is supported with an independent facility. This facility has its own independent quality control and Analytical Development facility. Equipped with an excellent pilot facility for scale-up, this facility is already working with leading firms by supplying critical intermediates for their pipeline products.

Formulations—its basket of formulations contain more than 150 products in several forms belonging to diverse therapeutic segments from anti-infective, cough & cold products to cardiovascular and oral anti-diabetics. The manufacturing expertise is available for almost all dosage forms including sterile as well as non sterile products. Formulations which account for
65% of the total business today has manufacturing facility at three different places; namely Vadodara & Panelav at Gujarat in the west & Baddi at Himachal Pradesh in the north. The facility at Panelav enjoys certifications from international regulatory authorities like MHRA (UK), MCC (South Africa). The formulation business has crossed the boundaries of India and is well spread to many other countries in overseas. Spread over 75 countries, Alembic Pharmaceuticals is one of the most integrated and robust pharmaceutical companies across the globe. The Company’s international network drives its mission of providing access to the best healthcare products at competitive prices to the people of most remote countries. Alembic Pharmaceuticals presents an extensive range of branded and generic formulations, in compliance with international and national regulations, that cater to diverse therapeutic segments.

Valuation & conclusion—

Alembic Pharmaceuticals is increasing profitability consistently by restructuring of its product portfolio. We expect company’s profit to grow at a CAGR of 30.2 % for next two years. At current market price, stock is trading at attractive valuation of 5.6 P/E multiple of its FY2013 estimated earnings. We recommend investors to BUY “Alembic pharmaceuticals Limited” with medium to long term investment horizon.