Alkem Laboratories Ltd. share price target

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...

Robust traction in India formulations (+20% YoY) during Q3, partly offset by a 7% decline in US generic revenue

It had a positive impact of higher offtake of COVID-19 associated drugs in the recent past. The reduction in COVID-19 cases, coinciding with seasonal change, bodes well for a pick-up in the performance of Acute therapies. Bunched-up ANDA launches over the next 12-15 months are expected to improve sales growth as well as profitability of the US business. We have tweaked our FY22E/FY23E EPS estimate by 2%/3% and continue to value ALKEM at 23x 12-months forward earnings to arrive at our TP of INR3,730. We remain positive on the back of robust growth in the DF segment and...

Alkem Labs reported a below-expected Q4FY21 with +7%/4% YoY sales/EBITDA growth.

ALKEM LABORATORIES LTD (Alkem) is a dominant Acute focused player in the IPM with leadership in the AntiInfectives. Its strong brands and penetration in the Acute side has led to its superior performance in the IPM. Chronic segment likely to double in size every 3 years on the back of Cardiac and Anti-diabetes. Higher profit contribution from chronic portfolio, improving MR productivity and rising scale in US generics will drive margin expansion of ~430bps over FY20-23E. Alkem's margins expansion visibility, rich return ratios and improving business profile merits a better multiple. We thus value Alkem at INR 4,000 on 17.5x EV/EVITDA on FY23E which gives an upside of 35% from the CMP. At current valuation of 13x EV/EBITDA and 18x PER on FY23E. Key risks include NPPA actions on key products, adverse USFDA regulatory actions and delay in biosimilars....

Alkem is the seventh-largest branded pharma company in India.

Alkem reported an in-line 2Q driven by exports and speedy recovery in India. Despite an acute heavy portfolio, India formulations were flattish YoY, up 35% QoQ exhibiting a sharp recovery aided by double digit growth in trade generics. US ($84mn) was strong with 12% CC growth backed by new launches and market share gains. As marketing and promotional activities resume slowly in India (~70%), EBITDA margins came 120bps lower sequentially at 25.4%. However, with promotional activities resuming normalcy we expect 2H to report margins of 15-16%,...

Monthly Chartbook: Green shoots emerging. Monetary Policy Review: Lender of last resort

Alkem Labs posted a solid Q1 EBITDA beat led partly by one-offs.

We remain positive on ALKEM due to robust ANDA pipeline/minimal regulatory risk in the US and 4QFY20 revenues grew 10.6% YoY to INR20.5b (v/s est. We expect 15% earnings CAGR over FY20-22E, led by 16%/10% sales CAGR in the US/DF generics on new launches and better traction in existing The reduced promotional expense in DF and improving profitability in the US should drive 220bp margin expansion over FY20-22E. Based on product pipeline and minimal regulatory risk in the US, we expect ALKEMs US sales to deliver 16% CAGR at ~USD420m over We cut our EPS estimates by 6%/4% for FY21/FY22E to factor in the weakness in DF segment over the near term. We expect 15% earnings CAGR over FY20-22E, led by 16%/10% sales CAGR in the US/DF generics on new launches and better traction in existing products.