Alkem Laboratories Ltd. share price target

Domestic sales were 6% below our estimates mainly due to slower recovery in the acute therapies and no price hike in NLEM portfolio

Q2 reported in-line numbers, where sales/EBITDA were 4% below our estimates. However, PAT was 1% above our estimate

With an established presence in the Domestic Formulation (DF) segment and exports, ALKEM is boosting its growth prospects in the bio-CDMO and med-tech segments. The overall investment in the bio-CDMO segment is expected to be ~INR14b.

Revenue grew 9% YoY in Q3 backed by strong India and ROW growth that offset lower US business

Q2 EBITDA/PAT outstripped consensus by 44%/54% on higher margins, strong US growth and low taxes

On a low base, Alkem’s Q1FY24 revenue / EBITDA / PAT grew 15% / 91% / 125% YoY, marginally ahead of our expectations. Growth in India was dragged by its trade generics biz (17-18% of India sales) though branded biz did better. Management has lowered its India revenue growth guidance to single digits owing to lacklustre outlook.

Q1 revenue/EBITDA a beat as international business outperformed; adj. PAT growth in line with consensus at 65% QoQ

Q4 EBITDA/PAT of Rs 3.5bn/Rs 710mn well short of consensus by 21%/ 79% primarily due to higher operating costs

Alkem Laboratories’ (Alkem) Q3FY23 performance beats our estimates on all fronts. Revenue grew 16.1% YoY to Rs30.4bn (I-Sec: Rs28.6bn) driven by US business. US revenue was up 26% QoQ, led by strong flu season sales. India business grew 9.7% YoY (-10.1% QoQ) to Rs.19.9bn.

Q3 revenue grew 16% YoY to Rs 30bn led by double-digit growth across markets; flu season drove US sales of US$ 92mn

Revenue grew 10% YoY to Rs 31bn in Q2 led by India business, but US price erosion continued to weigh on margins

Alkem Laboratories’ (Alkem) Q2FY23 performance was a mixed bag with revenue higher than estimates, but margin falling short due to elevated costs.

Alkem Laboratories’ (Alkem) Q1FY23 performance was lower than our estimates on the profitability front. Revenue declined 5.7% YoY to Rs 25.8bn (I-Sec: Rs 24.9bn) on a high base due to covid.

Q1 revenue declined 6% YoY (+4% QoQ) to Rs 25.7bn on a high base, and EBITDA dropped 66% on weak margins

Q4 revenue of Rs 24.8bn broadly in line with our estimate; PAT reduced 55% to Rs 1.1bn on account of prior years' tax

After MNC Pharma and pure-play companies like ERIS, ALKEM has minimal exposure to the international business. It has multiple growth drivers over the next 12-18 months, despite a high base in the past 12 months, due to: a) a revival in Non-COVID therapies and better MR productivity (14% net addition over the past two years), b) sustained outperformance in Chronic...