The EBITDA margin for the quarter came in at 12.7 per cent compared to guidance for FY19 which stood at 16.5 per cent due to an increase in R&D investments in the US
Alkem has declared its financial results for the fourth quarter, reporting sales up by 27 per cent YoY to Rs 12 bn for its business in India, and by 18 per cent YoY to Rs 4.8 bn in US. According to the company, the domestic business was mainly driven by sales in therapies like AI and GI. Gross margin stood stable on sequential basis at 57.6 per cent.
EBITDA rose by 12.7 per cent YoY to Rs 2.3 bn. The EBITDA margin for the quarter came in at 12.7 per cent compared to guidance for FY19 which stood at 16.5 per cent due to an increase in R&D investments in the US (complex products). Profit After Tax (PAT) for the quarter stood at Rs 1.7 bn, up by 9.3 per cent YoY, with an EPS of Rs 14.3.
“Management guidance remained positive on its business model to strengthen its brand leadership in acute therapies and increase its share in the chronic segment. The company is gaining market share from newer and older products, and its facilities are in good shape in terms of audit and getting approvals. Currently, management is focused on improving EBITDA margin significantly with the US business. Sustainable growth in the India business is expected, given its strong brand positioning, MR efficiency, and the scale-up in the chronic segment. A ramp-up in the US business is expected based on new launches, which should drive operating leverage. We expect FCF generation to improve to Rs5.9bn over FY19–20E,” stated a press release issued by India Nivesh, adding, “We believe Alkem is an attractive investment bet, given the domestic-heavy franchise, 25 per cent earnings CAGR over FY18–20E, a healthy balance sheet, and improving return ratios.”
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