Alkem lab's earnings were in line with our expectations on revenue front while EBITDA and PAT exceeded our expectations. Revenue at INR 33,2369mn saw a growth of 9.3% YoYowever declined by 3.4% sequentially. EBITDA saw a growth of 18.1% YoY and degrowth of 5.2% QoQ to INR 7,076mn with margin expansion of 159bps YoY to 21.3%. APAT at INR 6,423mn saw a massive growth of 41.3% YoY but degrew 4.9% QoQ. Company's domestic business outperformed IPM by 200bps mainly on account of gastro, VMN and anti-diabetic.
• India Business: Alkem Laboratories' India business achieved a 12.1% YoY growth, reaching INR 22,328mn, contributing 68.6% to total sales. In Q3FY24, the company's secondary sales grew by 8.5%, surpassing the Indian Pharmaceutical Market (IPM) growth of 8.3% YoY, according to IQVIA. The strong domestic performance was driven by Gastro (14.1% growth vs. IPM 9.3%), Anti-diabetic (16.3% growth vs. IPM 5.5%), and Vitamins & minerals (12.2% growth vs. IPM 8.4%). Anti-diabetic segment demonstrated exceptional performance with growth nearly 3 times that of the market. The trade generic segment also recorded robust growth during the quarter, and the company holds the top position in the market for anti-infectives.
• North America: Alkem Laboratories' US Business experienced a YoY degrowth of 10.2%, amounting to INR 6,838mn, contributing 21% to the overall sales. The decline was attributed to the higher base from the previous year, supported by the flu season. In Q3FY24, the company obtained 6 ANDA approvals (including 1 tentative approval) from the USFDA. As of December 31, 2023, Alkem has filed a total of 173 ANDAs and 2 NDAs with the US FDA, receiving approvals for 146 ANDAS (including 14 tentative approvals) and 2 NDAs. The USFDA inspection for the Mandva facility was completed in December 2023, resulting in 3 Form 483 observations. The company has submitted a detailed response to the USFDA outlining corrective and preventive actions.
• Other International Business: Other International Business witnessed a robust YoY growth of 46.9%, totaling INR 3,402mn, contributing 10.4 % to overall sales. The non- US business has made substantial contributions, particularly due to the launch of limited competition products in key focus markets, including Latin America, Australia, and Europe. Major markets such as Chile, the UK, and Germany experienced strong growth during Q3FY24.
Outlook and Valuation: Considering Alkem Laboratories domestic and US growth guidance, focus on complex products, and cost optimization measures, the expected CAGR for Revenue, EBITDA, and APAT is 10.5%, 24%, and 31.5%, respectively, for FY23- 26E. The valuation is based on FY26E EPS of INR 202.4, applying a PE multiple of 28x, resulting in a target price of INR 5,668. The recommendation for the stock is an ADD rating.
| Parameter |
Value |
| CMP (Rs) |
5,307 |
| Target Price (Rs) |
5,668 |
| Potential Downside (%) |
6.8 |
Company Info
| Details |
Values |
| BB Code |
ALKEM IN EQUITY |
| ISIN |
INE540L01014 |
| Face Value (Rs.) |
2 |
| 52 Week High (Rs.) |
5,410 |
| 52 Week Low (Rs.) |
2,835 |
| Mkt Cap (Rs bn.) |
634.5 |
| Mkt Cap ($ bn.) |
7.6 |
| Shares o/s (Mn.)/F.Float (%) |
119.5/42 |
| TTM EPS (Rs) |
142.9 |
| EPS FY26E (Rs) |
202.4 |
Shareholding Pattern (%)
|
Dec-23 |
Sep-23 |
Jun-23 |
| Promoters |
56.74 |
56.74 |
57.16 |
| Fil's |
8.49 |
6.03 |
5.63 |
| DII's |
15.91 |
17.63 |
16.34 |
| Public |
18.86 |
19.58 |
20.85 |
| YTD |
3Y |
2Y |
1Y |
| BSE Healthcare |
59.88 |
45.39 |
57.46 |
| Alkem Labs |
83.85 |
56.97 |
60.13 |
Alkem Laboratories Results 2023-24
| Particulars (Rs.mn) |
Q3FY24 |
Q3FY23 |
YoY (%) |
Q2FY24 |
QoQ (%) |
| Net Sales (incl OOI) |
4,873 |
4,421 |
10.2 |
5,094 |
(4.3) |
| Material Exp |
2,940 |
2,696 |
9.0 |
3,119 |
(5.7) |
| Gross Profit |
1,933 |
1,725 |
12.1 |
1,975 |
(2.1) |
| Employee Exp |
731 |
604 |
21.0 |
735 |
(0.6) |
| Other Exp |
553 |
524 |
5.6 |
559 |
(1.1) |
| EBITDA |
649 |
597 |
8.7 |
681 |
(4.7) |
| Depreciation |
146 |
160 |
(8.8) |
134 |
8.4 |
| EBIT |
503 |
437 |
15.1 |
546 |
(7.9) |
| Other Income |
50 |
34 |
44.3 |
40 |
24.8 |
| Interest Cost |
4 |
18 |
(77.8) |
4 |
(0.1) |
| PBT |
549 |
453 |
21.1 |
582 |
(5.7) |
| EO Items |
|
|
NA |
|
NA |
| Tax |
144 |
134 |
7.3 |
147 |
(2.3) |
| RPAT |
405 |
319 |
26.9 |
435 |
(6.8) |
| APAT |
405 |
319 |
26.9 |
435 |
(6.8) |
| Adj EPS (Rs) |
30.8 |
24.3 |
26.9 |
33.0 |
(6.8) |
| Particulars (Rs. Mn.) |
Q3FY24 |
Q3FY23 |
YoY (%) |
Q2FY24 |
QoQ (%) |
| Revenue |
33,239 |
30,409 |
9.3 |
34,402 |
(3.4) |
| Cost of Goods Sold |
13,045 |
12,489 |
4.5 |
13,271 |
(1.7) |
| Contribution Margin (%) |
60.8 |
58.9 |
182.4 |
61.4 |
(67.2) bps |
| Employee Expenses |
5,722 |
5,254 |
8.9 |
5,554 |
3.0 |
| EBITDA |
7,076 |
5,991 |
18.1 |
7,467 |
(5.2) |
| EBITDA Margin (%) |
21.3 |
19.7 |
158.8 |
21.7 |
(41.8) bps |
| Depreciation |
696 |
784 |
(11.3) |
739 |
(5.9) |
| EBIT |
6,380 |
5,206 |
22.6 |
6,728 |
(5.2) |
| Interest |
255 |
271 |
(5.9) |
303 |
(16.0) |
| PBT |
6,549 |
5,389 |
21.5 |
6,480 |
1.1 |
| Tax |
506 |
789 |
(35.9) |
332 |
52.7 |
| Adj. PAT |
6,423 |
4,547 |
41.3 |
6,752 |
(4.9) |
| PAT Margin (%) |
19.3 |
15.0 |
437.1 |
19.6 |
(30.4) bps |
| Adj. EPS |
53.7 |
38.0 |
41.3 |
56.5 |
(4.9) |
Source: Company, CEBPL
