Whalesbook
Alkem Laboratories surpassed revenue, EBITDA, and PAT expectations for the quarter, driven by broad-based growth and lower R&D spend. The company also outperformed the Indian Pharmaceutical Market (IPM) in key domestic formulation segments. Motilal Oswal has slightly reduced FY26/FY27 earnings estimates due to anticipated costs for new growth drivers but maintains a target price of INR 5,560.
Alkem Laboratories reported better-than-expected financial results for the quarter, with revenue exceeding estimates by 6%, EBITDA by 9%, and Profit After Tax (PAT) by 13%. This superior performance was attributed to broad-based revenue growth across its segments and lower-than-anticipated Research & Development (R&D) expenditure for the period.
Despite the ongoing GST transition in September 2025, Alkem Laboratories demonstrated stronger growth in its domestic formulation (DF) segment compared to the industry average. The company particularly outpaced the Indian Pharmaceutical Market (IPM) in key therapeutic areas, including respiratory, dermatology, pain management, VMN (Vitamins, Minerals, and Nutrients), and anti-infectives.
Looking ahead, Motilal Oswal has revised its earnings estimates downwards by 2% for FY26 and 4% for FY27. This adjustment factors in additional operational costs expected from the development of new growth drivers, specifically the Contract Development and Manufacturing Organization (CDMO) and Medical Technology (Med tech) segments.
Motilal Oswal values Alkem Laboratories at 28 times its 12-month forward earnings, setting a target price (TP) of INR 5,560.
Impact
This report suggests a positive outlook for Alkem Laboratories, supported by strong quarterly results and outperformance in critical segments. While earnings estimates have been modestly reduced for future years due to investments in new segments, the maintained price target indicates continued confidence from the brokerage firm. This could positively influence investor sentiment and potentially impact the stock price.
Rating: 7/10
Difficult Terms:
Research & Development (R&D): The process of investigating and developing new products, processes, or services.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance before accounting for non-operating expenses and non-cash charges.
PAT (Profit After Tax): The net profit of a company after all expenses, interest, and taxes have been deducted.
GST (Goods and Services Tax): An indirect tax levied on the supply of goods and services in India.
DF (Domestic Formulation): Pharmaceutical products manufactured and sold by a company within its home country.
IPM (Indian Pharmaceutical Market): The total market value and volume of pharmaceutical products sold in India.
CDMO (Contract Development and Manufacturing Organization): Companies that provide outsourced drug development and manufacturing services to pharmaceutical and biotechnology companies.
Med tech (Medical Technology): Products, services, and technologies used to diagnose, treat, and manage health conditions.
