Alembic Ltd Q1 FY26 – 118-Year-Old Pharma Patriarch Turned Real Estate Dealer with a Dividend Addiction

1. At a Glance

Alembic Ltd, once a pharma pioneer, is now more into constructing swanky Vadodara apartments and collecting dividend cheques from its star child Alembic Pharma. Q1 FY26 shows ₹50 Cr sales, ₹62 Cr profit (thanks to other income), and an EPS of ₹2.4. Stock at ₹108 trades at 8.7x earnings, with a juicy 2.2% dividend yield. Basically, a 118-year-old company acting like a semi-retired landlord who survives on rent and children’s allowance.

2. Introduction

Alembic’s history is longer than your grandpa’s bedtime story – founded in 1907, it’s seen the British Raj, Independence, the License Raj, liberalisation, and now Modi 3.0. Once a serious pharma player, it hived off the formulations business into Alembic Pharma Ltd (APL) in 2010. Since then, Alembic Ltd has become a holding-cum-real estate entity, with 28.5% stake in APL and 19% in Paushak Ltd.

Today, its financials look like this:

• Real estate = 80% of sales (luxury apartments, office buildings, “Alembic Art District” – yes, even skate parks).
• APIs = 20% of sales (bulk drugs, mostly low-margin job work).
• Dividend income from APL = 20% of total income (₹45 Cr FY24).

Think of it like a Gujarati business family where the elder brother (APL) is the rich NRI doctor in the US, while Alembic Ltd is the uncle in Vadodara renting out houses and surviving on money orders.

3. Business Model – WTF Do They Even Do?

Three parallel businesses, one identity crisis:

• Real Estate: High-rises (Veda, Kiara, Townhouse 24), luxury villas, commercial leasing. They’ve become Vadodara’s DLF-lite. FY24 real estate share shot up to 80% from 59% in FY22. Basically, the real estate boom has turned Alembic into a developer with pharma nostalgia.
• API Manufacturing: Limited molecules, mostly generic intermediates. Shrinking revenue, low margins. Like the old spice rack in your kitchen – still there, but nobody uses it.
• Investments/Power: Owns windmills (5 MW), captive cogeneration (6 MW), and ₹300 Cr stake in Paushak + ₹6,800 Cr stake in Alembic Pharma. The dividend from these investments is the secret sauce that makes the P&L look respectable.

So the “core” is not pharma, not real estate, not power – it’s basically a holding company masquerading as a real estate developer.

4. Financials Overview

Commentary:

• Revenue flat, EBITDA steady, PAT inflated by other income (dividends, investment returns).
• Core real estate + API not delivering much, but investments bail them out.
• Annualized EPS ~₹9.6. At CMP ₹108, P/E ~11x. Cheap-looking, but is it really?

Do you prefer a company making money by building houses, or one just collecting rent from its pharma offspring?

5. Valuation Discussion