I-Sec maintains Add on Alkem Laboratories, revises target price to Rs 5,900

ICICI Securities maintains an Add call on Alkem Laboratories with a revised target price of Rs 5,900 (earlier Rs 5,920). The current market price of Alkem Laboratories is Rs 5065.15. Alkem Laboratories, incorporated in 1973, is a Large Cap company with a market cap of Rs 61014.02 crore, operating in the pharmaceuticals sector.

Alkem Laboratories' key products/revenue segments include Pharmaceuticals, Other Operating Revenue, Export Incentives and Scrap for the year ending 31-Mar-2024.



Financials
For the quarter ended 31-03-2025, the company has reported a Consolidated Total Income of Rs 3289.71 crore, down -5.12 % from last quarter Total Income of Rs 3467.27 crore and up 8.79 % from last year same quarter Total Income of Rs 3023.99 crore. The company has reported net profit after tax of Rs 323.01 crore in the latest quarter.

The company?s top management includes Mr.Basudeo N Singh, Ms.Sudha Ravi, Ms.Sangeeta Singh, Mr.Arun Kumar Purwar, Mr.Sujjain Talwar, Mr.Sarvesh Singh, Mr.Mritunjay Kumar Singh, Mr.Srinivas Singh, Mrs.Madhurima Singh, Mr.Sandeep Singh, Mr.Narendra Kumar Aneja. Company has BSR & Co. LLP as its auditors. As on 31-03-2025, the company has a total of 12 crore shares outstanding.


Investment Rationale
ICICI Securities expects Alkem to witness revenue CAGR of 9.3% and nominal margin expansion of ~50bps to 19.9% over FY25-27E. They have reduced EPS by ~27% for FY27E to factor in higher tax rate. The stock trades at valuations of 27.3x FY26E and 33.0x FY27E earnings and EV/EBITDA multiple of 21.8x FY26E and 19.1x FY27E. The brokerage maintains ADD with lower target price of Rs 5,900 (earlier Rs 5,920) based on 22x FY27E EV/EBITDA (29x FY26E earnings earlier). Key downside risks include more products under price control, regulatory lapses in US-centric plants and slowdown in trade generics.

Promoter/FII Holdings
Promoters held 55.13 per cent stake in the company as of 31-Mar-2025, while FIIs owned 9.4 per cent, DIIs 19.42 per cent.