Alkem Laboratories Ltd. delivered a strong operational performance in the March quarter, helped by higher international sales and improving business mix, but rising costs and one-time charges weighed on earnings.
The company has guided for stable growth and largely steady margins in FY27, even as brokerages differ on the stock’s outlook.
With a market capitalisation of ₹62,842 crore, Alkem Labs closed at ₹5,256, down 0.39% from the previous session. The stock has delivered an 8% return over the past year.
Q4 Earnings Showed Strong Operating Performance
Revenue from operations rose 15% year-on-year to ₹3,603 crore in Q4FY26 from ₹3,144 crore a year earlier.
EBITDA increased 32% to ₹517 crore, compared with ₹391 crore in Q4FY25.
EBITDA margin expanded to 14.4%, up from 12.4% in the corresponding quarter last year.
Profit before tax, before exceptional items, climbed 40.7% to ₹557.8 crore.
Net profit, however, rose only 2% to ₹251 crore, while earnings per share declined 23% to ₹19.78 from ₹25.58.
Exceptional Charges Impacted Profit
The company reported an exceptional loss of ₹135 crore during the quarter.
This included:
- An impairment charge of ₹74.7 crore on real estate investments.
- An additional impact of ₹60.3 crore related to changes in the Labour Code.
According to Nomura, these were one-time items.
International Business Remained a Key Growth Driver
International sales grew 25.4% year-on-year during the quarter.
Growth in the US business stood at 26.2%.
During Q4FY26, Alkem:
- Filed five ANDAs.
- Received four approvals.
Domestic branded formulations also continued to perform well.
The company outpaced the Indian Pharmaceutical Market across several therapies, including:
- Gastro-intestinal.
- Pain management.
- Respiratory.
- VMN.
- Anti-diabetic.
Management Sees Stable FY27
Management expects the India branded generics business to grow 100-150 basis points faster than the Indian Pharmaceutical Market in FY27.
The company expects support from:
- New product launches.
- A higher contribution from chronic therapies.
- Increasing traction for Semaglutide in India.
Alkem has guided for FY27 EBITDA margins of 20-21%, indicating a largely stable profitability outlook.
Brokerages Remain Divided
Nomura: Buy, Target Price ₹6,890
Nomura maintained a Buy rating with a target price of ₹6,890, implying a potential upside of around 31%.
The brokerage said:
- Revenue was broadly in line with expectations.
- EBITDA was 11% above estimates.
- Gross margin improved to 65.4%, expanding 606 basis points year-on-year.
- Exceptional losses were one-off in nature.
Nomura also noted that the company’s FY27 guidance was either in line with or ahead of market expectations.
Jefferies: Buy, Target Price ₹6,500
Jefferies retained its Buy rating but lowered the target price slightly to ₹6,500 from ₹6,550.
The brokerage highlighted:
- Better-than-expected Q4 performance.
- Strong execution across business segments.
- Outperformance from the US and Rest of World businesses.
However, it said rising costs could restrict further margin expansion.
Jefferies expects the India business to benefit from:
- New launches.
- A better mix of chronic therapies.
Macquarie: Underperform, Target Price ₹4,900
Macquarie maintained an Underperform rating with a target price of ₹4,900.
The brokerage pointed to:
- Pressure on profitability.
- Limited scope for margin improvement.
- Stable but not accelerating growth.
It noted that overall guidance remained broadly unchanged despite a softer earnings profile.
Company Profile
Founded in 1973 and headquartered in Mumbai, Alkem Laboratories is among India’s largest pharmaceutical companies.
The company manufactures and markets:
- Pharmaceutical formulations.
- Active pharmaceutical ingredients (APIs).
- Nutraceutical products.
Its products are sold in more than 50 countries, and the company ranks among the top five players in the Indian Pharmaceutical Market.
TL;DR
Alkem Labs reported 32% EBITDA growth in Q4FY26, supported by strong international sales and margin expansion. Management expects stable growth and 20-21% EBITDA margins in FY27, though brokerages remain split over the impact of rising costs on profitability.
AI Summary
- Q4 revenue rose 15% to ₹3,603 crore.
- EBITDA increased 32% to ₹517 crore.
- International sales grew 25.4%, led by the US market.
- Management expects EBITDA margins of 20-21% in FY27.
- Nomura and Jefferies remain positive, while Macquarie has an Underperform rating.