Shares of Alembic Pharmaceuticals dipped 8 per cent to Rs 840 on the BSE in intra-day trade on Tuesday after the company reported disappointing numbers for the quarter ended June 2021 (Q1FY22), with consolidated profit after tax (PAT) declining 45.4 per cent year-on-year (YoY) to Rs 164.50 crore on weak performance of US business. The pharmaceutical company had posted a PAT of Rs 301 crore in Q1FY21.
Ebitda (earnings before interest, taxes, depreciation, and amortization) margins declined 1,258 basis points (bps) YoY to 17.8 per cent due to higher other expenditure.
The company’s revenues declined 1.1 per cent YoY to Rs 1,326 crore with strong growth in domestic formulations being offset by a 38.1 per cent YoY decline in US sales to Rs 369 crore. Domestic formulations grew 57.2 per cent YoY to Rs 481 crore. The acute and specialty segments grew faster than the represented pharmaceutical market, the company said.
"India business grew exceptionally well and outpaced the industry and we hope to see this momentum continuing due to the initiatives undertaken recently," the management said. The US business faced price erosion due to increased competition, however, the long term view of the US market remains intact, it added.
"The topline performance was below expectation, impacted by a decline in US sales. Profitability was also lower than expected due to higher than expected raw material, employee and other expenditure (ex-R&D). Owing to pricing pressure across the Sartan portfolio, increasing competition and delay in inspection, the management expects US quarterly sales to remain subdued in the near term, which may impact near term margins," ICICI Securities said in a note.
Analysts at Motilal Oswal Financial Services have lowered their FY22E/FY23E EPS estimates by 23 per cent/10 per cent to factor in considerable price erosion in the US base business, delay in successful compliance at Injectable sites due to the ongoing pandemic, and increased operational cost.
The benefits of meaningful investment in product development, as well as R&D towards injectables, are getting prolonged due to ongoing Covid-related travel restrictions on inspections, the brokerage said in a results update. It maintained its Neutral rating on the stock on the limited upside from current levels.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU