ALKEM LABORATORIES - Q1 FY 21 RESULTS REVIEW

 

Alkem LaboratoriesLtd (Alkem)

Q1 FY 21 RESULTS REVIEW

 

Key financial highlights of Q1FY21

·Revenue from Operations was ₹20,035million, year-on-year growth of 8.3%o

India sales were₹11,550million, year-on-year decline of 5.5%o

International sales were₹7,853million, year-on-year growth of 32.8%

·Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) was₹5,332million, resulting in EBITDA margin of 26.6%vs. 14.3% in Q1FY20. EBITDA grew by 101.6%YoY

·R&D expenses for the quarter was ₹1,186million, or 5.9% of Revenue from Operations compared to ₹1,034million in Q1FY20at 5.6% of Revenue from Operations

·Profit before tax (PBT) was ₹4,928million, a growth of 134.6% compared to Q1FY20

·Net Profit (after Minority Interest) was₹4,220million, year-on-year growth of 127.5%

Commenting on the results, Sandeep Singh, Managing Director, Alkem said,

“In these unprecedented times, I am pleased to share that the Company responded well to various challenges that came up mainly in the areas of manufacturing and supply chain to ensure that there were no shortages of essential medicines.

The Company delivered a resilient performance led by strong growth in its US business. While the India business was impacted by lockdown, the Company maintained its outperformance in its key established therapies of anti-infectives and gastro-intestinal.

Superior revenue mix and savings on marketing activities helped Company register strong EBITDA margins. Going forward, while it’s difficult to predict how the situation will unfold, the Company is taking all the necessary steps to ensure minimal impact on its operations.”

 

Operational Highlights

India  Business

In Q1 FY21, the Company’s India sales declined by 5.5%YoY, recording a sales of ₹11,550 million as compared to ₹12,222 million inQ1FY20. COVID-19 led lockdown significantly impacted the new prescription generation during the quarter on account of shut down of clinics, hospital OPDs and deferment of surgeries. As a result, Indian Pharmaceutical Market (IPM) registered a YoY decline of 4.9% during the quarter (Source: IQVIA data). The decline was sharper in the acute therapy areas of anti-infectives, gastro-intestinal, pain / analgesics and vitamins / minerals / nutrients compared to chronic therapy areas like neuro / CNS, cardiac and anti-diabetes which registered a YoY growth during the quarter.

 

With a significant part of the Company’s domestic sales coming from the acute therapy segments, the Company’s secondary sales during the quarter recorded a decline of 11.8% YoY.

However the Company continued its outperformance in therapy areas of anti-infectives, gastro-intestinal, vitamins / minerals / nutrients, cardiac and anti-diabetes.

This was driven by the Company’s strong brands, effective sales and marketing strategies, robust supply chain and distribution network and contribution from new product launches.

 

International Business

In Q1FY21, the Company’s International sales grew by 32.8%YoY, recording sales of ₹7,853 million as compared to ₹5,912million inQ1FY20.

·US sales for the quarter was ₹6,664million, recording a year-on-year growth of 38.3%.

·Other International Markets sales for the quarter was ₹1,189million, recording a year-on-year growth of 8.6%.

R&D Investments During the quarter, the Company filed 4abbreviated new drug applications (ANDAs) with the US FDA and received 2approvals (including 1tentative approval).

As on June30, 2020, the Company filed a total of 146ANDAsand 2new drug applications(NDA)with the US FDA. Of these, it has received approvals for88ANDAs (including13tentative approvals) and 2NDAs.

 

Key Highlights of Q1FY21

•Revenue from Operations grew by 8.3% YoY during the quarter, accompanied by significant expansion in EBITDA margin to 26.6% compared to 14.3% in Q1FY20

•Profit After Tax grew by 127.5% compared to the previous year

•IndiaBusiness:

Lower patient foot falls and shutdown of hospital OPDs and private clinics impacted the new prescription generation during the quarter.

IPM registered a decline of 4.9% YoY with steeper decline in acute therapies

• Company’s secondary sales declined by 11.8%YoY (Source:IQVIAdata)

• Company maintained its outperformance in its key established therapies of anti-infectives and gastro-intestinal(Source:IQVIAdata)

•US Business grew by 38.3%YoY during the quarter, largely driven by new product launches

• R&D expenses during the quarter was at 5.9% of revenue from operations compared to 5.6% in Q1 FY20

•The Company filed 4 ANDAs and received 2 ANDAapprovals (including1 tentative approval) from the US FDA in Q1 FY21

 

India Business:

Q1FY21 Sales of ₹ 11,550 million (5.5% YoY decline)

•India sales contributed 59.5% to total sales in Q1 FY21

•Shutdown in clinics, hospital OPDs and deferment of surgeries due to COVID-19 lockdown significantly impacted the new prescription generation during the quarter

• As a result, IPM’s secondary sales for the quarter ended June 2020 declined  by 4.9% YoY, with sharper decline in acute therapies like anti-infectives, gastro-intestinal and pain / analgesics.

Alkem’s secondary sales dipped by 11.8%YoY in Q1 FY21

•The Company grew ahead of the market in the therapy areas of Anti-infectives, Gastro-intestinal, Vitamins /Minerals/ Nutrients, Cardiac and Anti-diabetes

 

US Business:

Q1 FY21 Sales of ₹ 6,664 million (38.3% growth YoY)

• US sales contributed 34.3% to total sales in Q1 FY21

•Growth in US dollar terms was 28.4% YoY

• In Q1FY21,the Company filed 4 ANDAs with the US FDA and received 2 approvals (including 1 tentative approval)

•As on June30 , 2020, the Company has filed a total of 148 ANDAs (including 2 NDA) with the US FDA and has received 90 approvals (including 13 tentative approvals and2 NDA)

 

FacilityScope

Last inspection Status

post last inspection St. Louis(US)Formulation February 2020 EIR# received in May2020

Baddi (India) Formulation February 2020 EIR#received in March2020

Daman (India)Formulation August 2019 EIR# received in October 2019

California(US) API August 2018 Successfully closed without any observations

Ankleshwar(India) API December 2016 EIR# received in March2017

Mandva (India) API September 2015 EIR# received in March2016# EIR – Establishment Inspection Report indicating successful close of inspection

 

Other International Business:

Q1FY21 Sales of ₹ 1,189 million (8.6% YoY growth)

•Other International Market sales contributed 6.1%to total sales in Q1FY21

•The Company has presence in Australia, Europe, South East Asia, Latin America, Africa and CIS

•Chile and Kazakhstan registered healthy growth during the quarter

 

Alkem Laboratories (in Rs. Cr.)	Jun '20	Mar '20	Dec '19	Sep '19	Jun '19	YOY	QOQ
Net Sales	2,003.49	2,048.99	2,181.84	2,264.03	1,849.50	8.33	-2.22
Consumption of Raw Materials	538.67	508.57	549.42	528.47	545.37	-1.23	5.92
Purchase of Traded Goods	346.82	348.42	383.43	366.82	344.39	0.71	-0.46
Increase/Decrease in Stocks	-151.63	37.4	-98.42	9.01	-177.94	-14.79	-505.43
Employees Cost	394.23	329.92	395.62	389.63	390.32	1	19.49
Depreciation	66.83	81.05	59.48	56.4	55.83	19.7	-17.54
Other Expenses	342.22	521.65	498.52	517.51	482.86	-29.13	-34.4
P/L Before Other Inc., Int., Excpt. Items & Tax	466.35	221.98	393.79	396.19	208.67	123.49	110.09
Other Income	43.5	27.47	27.86	31.42	17.47	149	58.35
P/L Before Int., Excpt. Items & Tax	509.85	249.45	421.65	427.61	226.14	125.46	104.39
Interest	17.1	14.15	17.04	17.75	16.12	6.08	20.85
P/L Before Tax	492.75	235.3	404.61	409.86	210.02	134.62	109.41
Tax	69.56	43.76	14.65	29.34	22.73	206.03	58.96
Net Profit/(Loss) For the Period	423.19	191.54	389.96	380.52	187.29	125.95	120.94
Minority Interest	-1.18	-2.77	-7.98	-9.67	-1.82	-35.16	-57.4
Net P/L After M.I & Associates	422.01	188.77	381.98	370.85	185.47	127.54	123.56
Equity Share Capital	23.91	23.91	23.91	23.91	23.91	0	0
Basic EPS	35.3	15.79	31.95	31.02	15.51	127.6	123.56
MP	2925.15
VOLUMES	3,50,000
52 Wk L/H	1662.3	3089.55

 

MP  2925.15

VOLUMES      3,50,000

52 Wk L/H     1662.3   3089.55

CHART shows - price is STEADILY RISING SINCE SEP 2019

 

Valuation    

Market Cap (Rs Cr.)  35,047.49

P/E  23.63   

Book Value (Rs) 525.27    

Dividend (%) 1250    

Industry P/E  35.94   

EPS (TTM)     123.78 

P/C 20.98   

Price/Book  5.58 

Dividend Yield.(%)  0.85   

Face Value (RS)  2     

Deliverables (%)  39.97    

 Alkem Launches Favipiravir under Brand Name 'Alfluenza' for Covid-19 Treatment