Target: ₹6,230
Current Market Price (CMP): ₹5,497.80
Alkem Laboratories reported a 32 percent year-on-year increase in its EBITDA, driven by a 15 percent rise in sales and an improved gross margin of 65.9 percent, despite facing higher operational costs, which increased by 16 percent in staffing, 45 percent in R&D, and 28 percent in SG&A.
The company has outlined its expectations for the future:
- The domestic market is anticipated to outpace the Indian Pharmaceutical Market (IPM) growth by 100-150 basis points in FY27, primarily due to a larger share from chronic therapies.
- The company plans to scale up its GLP-1 franchise, alongside continuing to gain traction from key therapies and new product launches.
- Management additions will be strategically focused on the chronic sector.
- Caution will be maintained regarding short-term gross and EBITDA margins due to rising costs influenced by geopolitical factors; however, the goal is to enhance EBITDA margins by 100 basis points annually in the upcoming years.
- Growth in the US market is projected to be in the high single digits, supported by new product introductions.
- International export formulations are expected to achieve high-teen growth in the coming years, with R&D spending targeted at 4-5 percent of sales.
The launch of Semaglutide (GLP-1) has shown positive momentum, with the company capturing approximately 11 percent of the market share for its injectable form, a figure that is expected to improve in the following months. The oral solid form of the drug is currently in the late clinical phase, with plans for India approval filing anticipated soon.
In light of the company’s performance for FY26, its outlook, and a reduced Effective Tax Rate (ETR), earnings per share (EPS) estimates have been adjusted upward by 2 percent and 6 percent for FY27 and FY28, respectively. Consequently, the target price has been revised to ₹6,230 based on a price-to-earnings ratio of 28 times the FY28 EPS. The recommendation remains at “ADD,” as the India business is expected to remain stable and the US operations are projected to expand, alongside consistent margin improvements.
Published on May 29, 2026
