Buy Alkem Lab, target price Rs 3,300: Angel Broking

Angel Broking has given a buy rating to Alkem Lab with a target price of Rs 3,300, marking a 39.6 per cent upside to a CMP of Rs 2,363.

The share price of the pharma company moved up by 0.50% from its previous close of Rs 2360.15. The last traded stock price is Rs 2372. Incorporated in 1973, Alkem Laboratories has a market cap of Rs 28674.68 crore.

Investment Rationale


Alkem Lab’s 67% of revenue comes from domestic generic and API business. Anti-infectives and cronic business continue to provide revenue growth for Alkem.

The pharma company is expected to outperform the Indian Pharmaceutical market (IPM) by 1.5 times growth rate for the next 2 years. The brokerage expects Alkem to grow its top line by 13-15% in the coming years.

Financials

For the quarter ended December 31, 2019, the company reported consolidated sales of Rs 2181.84 Crore, down -3.63 % from last quarter Sales of Rs 2264.03 Crore and up 13.34 % from last year's same quarter Sales of Rs 1925.03 Crore. The company reported net profit after tax of Rs 389.96 Crore in the latest quarter.

Promoter/FII Holdings

Promoters held 65.88 per cent stake in the company as of March 31, 2020, while FIIs held 3.64 per cent, DIIs 11.78 per cent and public and others 18.70 per cent.