CRISIL said that the ratings continue to reflect the strong position of Alembic Pharma in the domestic formulations market, its growing presence in the international generics segment and healthy financial risk profile.

These strengths are partially offset by average profitability due to increased operating expenses from new manufacturing facilities, sizeable research, and development (R&D) expenditure, high share of the acute therapeutic segment in domestic formulations and exposure to intense pricing pressure and regulatory risk in the pharma industry.

The working capital intensity continues to be moderately high. Gross current assets are expected to be at 180-200 days over the medium term (182 days as on March 31, 2023), given the focus on maintaining larger inventory to capitalise on any market opportunity and avoid any supply-side disruption.

The company has incurred sizeable, debt-funded capital expenditure (capex) over the past few fiscals towards specialised generics. It has further planned to incur annual capex of Rs 250-300 crore over the medium term towards routine maintenance, which shall remain funded through internally generated funds.

Financial risk profile remains healthy, with only short-term debt outstanding, translating into comfortable debt protection metrics.

Alembic Pharmaceuticals manufactures a range of formulations and bulk drugs for the domestic and international markets. It has nine manufacturing facilities for formulations and active pharmaceutical ingredients (APIs) and three R&D facilities.

Profit after tax (PAT) stood at Rs 438 crore on revenue of Rs 4,712 crore for the first nine months of fiscal 2024, against Rs 189 crore and Rs 4,246 crore, respectively, in the corresponding period of fiscal 2023.

The scrip shed 0.04% to end at Rs 998.90 on the BSE yesterday.