How has been the historical performance of Alembic Pharma?

Revenue and Profit Trends

Over the seven-year period ending March 2025, Alembic Pharma’s net sales have shown consistent growth, increasing from ₹3,935 crores in 2019 to ₹6,672 crores in 2025. This represents a compound annual growth rate (CAGR) of approximately 10.5%, reflecting the company’s expanding market presence and product portfolio. Total operating income mirrors this trend, as other operating income remained nil throughout the period.

Operating profit before depreciation and interest (PBDIT) excluding other income exhibited volatility, peaking at ₹1,480 crores in 2021 before moderating to ₹1,008 crores in 2025. The operating profit margin (excluding other income) declined from a high of 27.45% in 2021 to 15.11% in 2025, indicating rising costs or pricing pressures. Despite this, the company maintained positive operating profitability throughout.

Profit before tax (PBT) followed a similar pattern, reaching a peak of ₹1,368 crores in 2021 and settling at ₹706 crores in 2025. Correspondingly, profit after tax (PAT) peaked at ₹1,115 crores in 2021 but declined to ₹581 crores in 2025. The PAT margin also contracted from 20.67% in 2021 to 8.72% in 2025, signalling a more challenging profitability environment in recent years.

Cost Structure and Margins

Raw material costs have risen in line with sales, from ₹850 crores in 2019 to ₹1,672 crores in 2025, reflecting increased production volumes and input prices. Purchase of finished goods and employee costs have also increased steadily, with employee expenses growing from ₹747 crores in 2019 to ₹1,562 crores in 2025. Other expenses similarly escalated, reaching over ₹2,300 crores in 2025.

The company’s gross profit margin declined from 28.77% in 2021 to 14.76% in 2025, indicating margin pressure possibly due to higher input costs or competitive pricing. Interest expenses increased notably in recent years, from ₹16 crores in 2021 to nearly ₹79 crores in 2025, which may have impacted net profitability.

Balance Sheet and Financial Position

Shareholders’ funds have grown steadily, reaching ₹5,191 crores in 2025 from ₹3,219 crores in 2020, supported by rising reserves. The company’s total liabilities increased to ₹7,607 crores in 2025, up from ₹5,989 crores in 2020, reflecting higher borrowings and current liabilities. Notably, long-term borrowings were eliminated by 2025, while short-term borrowings surged to ₹1,196 crores, indicating a shift in debt profile.

On the asset side, net block (fixed assets) expanded from ₹1,552 crores in 2020 to ₹2,524 crores in 2025, signalling ongoing capital investments. Capital work in progress decreased from a peak of ₹2,206 crores in 2022 to ₹837 crores in 2025, suggesting project completions. Current assets rose significantly to ₹4,088 crores in 2025, driven by increases in inventories and sundry debtors, which may reflect higher sales and working capital requirements.

Cash Flow and Liquidity

Cash flow from operating activities has fluctuated, peaking at ₹1,463 crores in 2021 before declining to ₹87 crores in 2025. The company experienced significant changes in working capital, with a large outflow of ₹921 crores in 2025, which constrained free cash flow. Investing activities consistently showed cash outflows, reflecting ongoing capital expenditure and investments.

Financing activities varied, with a substantial inflow of ₹443 crores in 2025, contrasting with outflows in prior years. Despite these movements, the net cash position declined slightly in 2025, with closing cash and cash equivalents at ₹83 crores, down from ₹120 crores in 2024.

Earnings per share (EPS) have mirrored profit trends, rising from ₹31.00 in 2019 to a peak of ₹59.94 in 2021 before falling to ₹29.68 in 2025. Book value per share has generally increased, reaching ₹264.10 in 2025, indicating growth in net asset value per share over time.

Summary

Alembic Pharma’s historical performance reveals a company that has grown its top line consistently while facing margin pressures and fluctuating profitability in recent years. The balance sheet shows strengthening equity and a shift in debt structure, with increased short-term borrowings. Cash flow dynamics highlight challenges in working capital management, impacting liquidity. Investors should weigh the company’s solid revenue growth against the recent contraction in profit margins and cash flow constraints when considering its prospects.

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