Whalesbook
Alivus Life Sciences is reviewing its options after receiving a tax demand order for Assessment Year 2023-24 from the Income Tax Department. The demand totals ₹2.61 crore, including interest, arising from disallowed expenditures. The company recently received the notice and stated there is no material impact on its ongoing financial operations.
This tax assessment introduces new scrutiny for investors tracking the midcap pharmaceutical player. The company's decision on whether to appeal the order is now a key point of interest, as any legal strategy or outcome could influence investor sentiment.
Alivus Life Sciences, formerly known as Glenmark Life Sciences, operates in the pharmaceutical sector, focusing on Active Pharmaceutical Ingredients (APIs) and Contract Development and Manufacturing (CDMO) services. Financially, the company has demonstrated strong deleveraging, reducing its debt-to-equity ratio from 144.7% to 2% over the past five years. For the fiscal year ending March 2025, net profit reached ₹4,856 million, representing a 3.1% year-on-year increase, though net profit margins saw a slight decrease.
In the third quarter of FY25, Alivus reported net sales of ₹641.84 crore and an operating profit of ₹190.30 crore. For FY25, net profit margins were reported at 20.3%, a small dip from 20.6% in FY24.
The company has prior experience with tax assessments, having received partial relief in a tax appeal for FY 2019-20 where the demand was revised downwards. While Alivus claims no material impact, potential risks include the costs and duration of tax litigation if an appeal is pursued, and the financial impact of having to pay the demand if an appeal is unsuccessful.
Operating within the competitive API manufacturing industry, Alivus Life Sciences is compared with peers such as Aarti Drugs Ltd., Granules India Ltd., and Solara Active Pharma Sciences Ltd. Recent data shows their respective P/E ratios at approximately 15.7x, 21.3x, and 14.6x, serving as valuation benchmarks for the sector.
Key developments to monitor include the timeline for Alivus Life Sciences' appeal decision, the progress of any legal proceedings, and ongoing operational performance, such as revenue growth and profitability in upcoming quarters.