We bring to you various
Recommendations and Reviews of the IPO of Alkem by Research Analysts
Kumar Saurabh of Motilal Oswal has the following Recommendation
Valuations at a discount to peers- At higher-end of the price band, the company would trade at 27x FY15 and 16x 1HFY16 /ER (~15-20% discount to peers). The company delivered revenue, EBITDA and EPS CAGR of ~24%, 17% and 12%, respectively, over FY11-15.
Reliance Securities Analyst Sapna Jhawar has the following review,
Alkem is definitely entering late into chronic and lifestyle therapies but its experience of brand-building and a large prescriber base should come in handy. At a price band of Rs1,020- 1,050, Alkem is valued at 15.7/16.2x FY18E EPS, (as per our back of the envelope calculations) which we feel is fairly valued given its operational scale. We recommend Subscribe to the issue
Rohit Sinha from Asit C Mehta Brokerage has the following note,
The company have expanded substantially in the international market over the past couple of years largely through inorganic expansion. This has resulted in margin contraction from 18.12% in FY12 to 12.43% in FY15. However, margins are likely to recover once these investments will start delivering results. The shares are offered at a price band of Rs 1020-1050 at PE of 18.5-19xs on FY16E earnings, which seems reasonable
IIFL Analyst Bhavesh Gandhi Wrote,
Domestic and export formulations have posted stellar 17.6% and 46.2% cagr over FY13‐15 and we expect the momentum to continue with 16% and 29% cagr over FY15‐18E respectively. At the upper price band, Alkem is available at ~12x FY18E earnings, which is much cheaper as compared to peers like Alembic and Indoco. We recommend investors to Subscribe at the upper price to gain exposure into a robust domestic business with promising foray into chronic segment and US market.
Ajcon Global Research Analysts Wrote,
With due consideration to factors like a) market leadership in various therapeutic areas and ability to build market leading brands in the domestic market, b) extensive sales, marketing and distribution network in India, c) strong R&D capabilities with 480 scientists working on various drug products and substances, d) strong pipeline of ANDAs, e) decent past financial performance, g) positive cash flow from operations over last five years & decent ROEs, we believe the valuations are reasonable and recommend investors to “SUBSCRIBE” the issue .
Aditya Birla Money Analysts Suresh Gardas and Naveen Baid wrote,
Alkem’s sales have grown at a CAGR of ~22% to ~Rs37.9bn while profit has grown by a CAGR of ~12% to ~Rs4.6bn during FY11-FY15. Alkem’s brand building capabilities, consistency and track record gives us conviction and makes us believe that it would be able to deliver better than the Industry growth by a substantial margin over the foreseeable future. We recommend “Subscribe” on
Alkem Laboratories IPO for medium to long term investors for one of its kind opportunity. There is a strong possibility of listing gains as well and therefore Investors should use this opportunity
IndiaNivesh Analysts Wrote,
We recommend TO SUBSCRIBE for the IPO. At issue price of Rs1,020-Rs1,050, adjusting for cash on books, the stock would be available at 39x FY15E adj. EPS of Rs25. Given the strong y-y growth of 41% in sales in 1HFY16 due to inorganic route as well as new product launches and good visibility of interesting product pipeline over medium term, we assume 30% CAGR in sales and 42% CAGR in core business PAT over FY15-17E. Then, ALKEM would be available at 24.6x FY16E EPS of Rs39 and 19.4x FY17E EPS of Rs50.4. The valuation is comfortable compared to peers in midcap pharma space. Hence we recommend SUBSCRIBE to the IPO.
Way2WEalth has the Following Recommendation
With established presence in various therapeutic areas with well known brands and number of filing in the U.S. market, the Company is in the sweet spot. At the offer price bands, the issue is available at P/E of 26.3-27.1x its FY15 EPS of ~Rs38.7.The asking price seems conservative compared to its listed peers which are currently quoting at a P/E in the range of 30-38x. The recent H1FY16 financials have shown a significant improvement over the last year with better margins. Assuming the Company is able to sustain this growth momentum attained in the first half of the year in the coming years, the current valuations looks attractive. One may SUBSCRIBE for long-term
Reliance Securities has the following Review,
Alkem has set forth an ambitious target of doubling its US contribution in the next 5 years. Today, US contributes a quarter of the overall revenue. With its impending product pipeline and focused efforts in R&D, we believe the company is following the footsteps of Alembic and Torrent pharma. Besides, its India business is a steady cash cow at 17-18% growth adding financial muscle to the company. Alkem is definitely entering late into chronic and lifestyle therapies but its experience of brand-building and a large prescriber base should come in handy. At a price band of Rs1,020-1,050, Alkem is valued at 15.7/16.2x FY18E EPS, (as per our back of the envelope calculations) which we feel is fairly valued given its operational scale. We recommend Subscribe to the issue.
We have a Subscribe Recommendation on Alkem IPO from Equitymaster and the subscribe reco may have come after a long long time.
Alkem has been able to establish quite a strong position in the Indian market. Further, the company has the largest number of brands (five) in the top 50 brands of the Indian pharmaceutical industry for fiscal year 2015 in terms of domestic sales (along with another leading pharmaceutical company). In the international markets, the company has various products awaiting USFDA approval. The company has also diversified its business in the domestic market, and is focusing more towards the chronic segment. These aspects will be important growth drivers for the company. Thus, going forward, margins and return ratios will depend on a better product mix.
On the valuations front, in comon to its peers, and going by the current performance of the company, at the given band of Rs 1,020 and Rs 1,050, the stock is valued at P/E multiple in the range of 17-17.5 times its TTM earnings, which does not appear to be very expensive.
Taking into account these factors, we recommend investors to SUBSCRIBE to the IPO.
BOB Capital has the following note
We recommend “SUBSCRIBE” to our investors with a medium to long term time horizon as the company is reasonably priced based on PE multiple. Further, given the size and scale of this company, we expect the company to do reasonably well in the medium to long term.
SPA Securities has the following View,
Alkem's domestic revenues have grown at a CAGR of 17.6% between FY11-15, surpassing industry growth of ~12.3%. At the issue price band of INR 1020- 1050, the stock is available at a multiple of 14.6x based on annualized FY16E EPS of INR 72, which seems to be reasonable given its proven track record and decent market share. Its peers like Torrent Pharma, Ipca Lab, Cadila, Alembic Pharma are trading at average PE of 30.8x based of FY16E earnings. We recommend investors to SUBSCRIBE to the issue.
