Alembic Pharmaceuticals Ltd reported a mixed set of earnings for the March 2025 quarter, reflecting a divergence between top-line growth and bottom-line performance. Despite an increase in revenue, profitability declined, primarily due to pressure on margins and cost factors.

Profitability Slips Despite Healthy Revenue

In the March quarter of FY25, consolidated net profit stood at ₹157 crore, representing a drop of 11.8% year-on-year compared to ₹178 crore in Q4 FY24. This fall came despite revenue growth beating expectations, indicating that cost pressures and margin shrinkage weighed down on profits.

On the revenue front, Alembic posted a 16.7% increase, with total consolidated revenue touching ₹1,769.6 crore as against ₹1,517 crore in the same quarter last year. This performance exceeded market expectations, which had forecasted around 8% revenue growth.

EBITDA Margins Narrow Despite Growth

The company delivered a modest improvement in operational performance. EBITDA for the quarter rose by 4.6% YoY to ₹272 crore, up from ₹260 crore in the previous year. However, EBITDA margins declined to 15.4% from 17.1%, suggesting rising input costs or increased R&D/marketing expenses impacting operational efficiency.

This compression in margins, despite a jump in revenues, was a key concern for investors and analysts tracking the company’s performance closely.

Segment-Wise Business Breakdown

Alembic’s performance across its key business segments was varied:

• India Branded Business: This vertical registered 8% growth YoY, clocking revenue of ₹545 crore in Q4. The company attributed this to strength in specialty therapies, a focus area for its domestic operations.

• US Generics Business: One of the star performers, this division grew 20% YoY, contributing ₹508 crore to the total revenue. This growth was driven by new product launches and consistent demand, particularly in chronic therapeutic areas.

• Ex-US Markets: The ex-US international markets surged by 43% YoY, bringing in ₹375 crore in revenue. Strong traction in regions like Latin America, the Middle East, and Africa helped lift numbers in this segment.

• API Segment: The Active Pharmaceutical Ingredients (API) division recorded 4% growth, with revenue at ₹342 crore. Though this segment grew modestly, it remains an important part of Alembic’s backward integration strategy.

Management Outlook and Dividend Declaration

The management, in its post-result commentary, remained optimistic about the future, citing robust momentum in both domestic and international markets. Particular emphasis was placed on the animal health and ex-US segments, which have shown rapid expansion.

They also highlighted the company’s earnings per share (EPS) for FY25 at ₹29.68, which is slightly lower than the previous year due to the drop in net profit.

In a move to reward shareholders, the Board of Directors proposed a dividend of ₹11 per share for FY25, subject to shareholder approval at the upcoming Annual General Meeting (AGM).

Stock Market Reaction

Despite the positive revenue growth and dividend announcement, investors reacted negatively to the fall in profits and margin compression. On the BSE, Alembic Pharma shares fell by 4.4% intraday, hitting a low of ₹864.10, down from the previous close of ₹903.90.

The stock movement reflects investor concerns over profitability sustainability, even though top-line growth appears strong.

Conclusion

While Alembic Pharmaceuticals showed strong sales momentum across most segments, profitability remains under pressure. The narrowing EBITDA margins and lower net profit raise questions about cost control and operational efficiency. However, steady growth in US and ex-US markets, a growing domestic branded portfolio, and dividend payout paint a positive long-term picture.

The company’s solid performance in global markets, especially with specialty products and generics, is likely to continue being a growth engine in the upcoming quarters.

Investors may want to watch for how Alembic handles its cost structure in the future, and whether it can maintain or improve margins while continuing its global expansion and R&D investments.

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