Alembic Pharma (APLLTD)

FairStock Score: 58/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Conservative balance sheet with Debt/Equity of only 0.28
• High promoter holding of 69.74% aligns shareholder interests
• Healthy Piotroski F-Score of 7/9 and Altman Z-Score of 3.16 indicate financial stability
• Return on equity of 12.12% and ROCE of 13.05% are respectable
• Dividend yield of 1.55% offers some income while waiting

Concerns

• Valuation is expensive: price ₹769.80 against Graham Number ₹435.98, giving no margin of safety
• Free cash flow is negative at -₹480 Cr despite net profit of ₹132 Cr in the latest quarter
• Profit growth of 4.00% lags sales growth of 13.20%, suggesting margin pressure
• EV/EBITDA of 89.63 is extremely high, making the market pay a premium for a small EBITDA stream

AI Analysis

Let me evaluate Alembic Pharma the way I would any business. The balance sheet is conservative: debt to equity is only 0.28, promoters hold 69.74%, and the Altman Z-score of 3.16 suggests no near-term distress. Return on equity is 12.12% and ROCE is 13.05%—decent, but not exceptional. Piotroski's F-score of 7 out of 9 tells me the company is not deteriorating in its core signals. This is a reasonably run pharmaceutical business with an owner-operator mindset. Now the price. At ₹769.80, I am paying 21.07 times earnings and 2.91 times book value. Book value is ₹264.09, so most of what I pay is future optimism. Graham’s conservative valuation, the Graham Number, is ₹435.98. That means the current price carries a negative margin of safety—far too thin for a disciplined value buyer. Growth is where I get cautious. Latest quarterly sales are ₹1,876 Cr with net profit of ₹132 Cr. Sales grew 13.20%, but profit grew only 4.00%. Over five years, revenue compounded at just 4.35% per year. So this is not a rapid grower. It looks like a slow, steady business that happens to be showing a recent revenue bounce. More worrying, free cash flow is negative at ₹480 Cr. In an ideal business, profits should convert into cash, not consume it. And an EV/EBITDA of 89.63 is extremely expensive, meaning the market is paying a premium for a small EBITDA stream. I respect a low-debt pharma company with a strong promoter, and the 1.55% dividend gives me something while I wait. But value investing demands a margin of safety. At this price, I do not have one. I would keep Alembic on my watch list and wait for a cheaper entry—closer to Graham's number—before committing capital.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer