Alembic Pharma shares surge 16%; here's why

Shares of pharmaceutical major Alembic Pharma surged as much as 15.9% to hit an intraday high of ₹834 apiece on the BSE today, after DSP Healthcare Fund raised its stake in the company marginally by 0.02%.

According to the exchange filing, DSP Healthcare fund, which was launched by DSP Mutual Fund, acquired 36,276 shares in Alembic Pharma to hike its stake in the company to 5.01%. The company earlier held a 4.99% stake in Alembic Pharma.

The scrip opened marginally higher at ₹719.55 as against the previous closing price of ₹719.40. At 1:58 pm, the share price of the company was trading 4.25% higher at ₹750. In contrast to this, the broader BSE Sensex was trading 33.80 points or 0.05% lower at 66,868.11. The company’s market capitalisation stood at ₹14,796.29 crore with more than 1.50 lakh shares exchanging hands on the BSE as against the two-week average of 5,674 shares.

At present, the share price of the company is trading 10.5% lower than the 52-week high of ₹839, which the company touched on October 19 this year. The share price of the company is trading 62.3% higher as against the 52-week low of ₹463.30, which the company touched on March 29 this year.

In the past six months, the counter has given 35.18% in return. In the year-to-date period, the counter has given 31.92% in return.

In the July to September quarter of FY24, the consolidated profit after tax of Alembic Pharma surged 3.21% year-on-year (YoY) to ₹136.56 crore. The company’s revenue from operations during the quarter under review surged 8.17% to ₹1,594.93 crore as against ₹1,475.01 crore in the same period last year. The company’s EBITDA (earnings before interest, tax, depreciation and amortisation), however, declined by 10.5% year-on-year to ₹208.3 crore. The company’s PAT margins contracted by 48 basis points year-on-year (YoY) during the quarter under review.

According to analysts at KR Choksey, the company’s revenues/ EBITDA/ PAT are to grow by 11.5%/ 29.1%/ 43.1% CAGR, respectively, over FY23-25E.

"The company's shares are currently trading at 27.3x/ 20.7x its FY24E/FY25E revised EPS (earnings per share) of ₹27.0/35.6 respectively. Applying a target P/E multiple of 21.7x on FY25E EPS of INR 35.6, we arrive at a target price of INR 770/share, which gives a potential upside of 3.6% from the CMP. Accordingly, we maintain our rating of 'HOLD' on the shares of Alembic Pharma," the brokerage firm says in a note.

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