1.At a Glance
Alkem Labs isn’t just another pharma name — it’s the #1 anti-infective player in India and the 5th largest domestic formulations company with a 4.1% market share. FY25 clocked ₹13,304 Cr in sales and ₹2,333 Cr in PAT, giving it an ROE of 19.4% and a comfortable ROCE of 20.4%. With a P/E of ~27x, the market’s saying: “You’re not Sun Pharma yet, but you’re not some small-cap API shop either.” Dividend payout? A healthy 37%, which means shareholders get more than just the joy of reading annual reports.
2.Introduction
In a country where fevers and infections spread faster than stock market rumours, Alkem has built its fortress on antibiotics. But it’s not sitting still — the company’s chronic therapy push in neurology, cardiology, and diabetology is aimed at keeping revenue steady even when monsoon fevers fade.
Q1 FY26 was a clean 11% YoY sales growth story with a 20% OPM and ₹668 Cr net profit (+19.9% YoY), boosted by both domestic and international markets. They also announced a 51% stake in a new Saudi Arabia subsidiary — expanding beyond India’s crowded pharma playground.
The growth challenge? 5-year sales CAGR is only 9%, slower than some peers. But a 10-year profit CAGR of 20% says Alkem knows how to fatten the bottom line even in a slow-growth top line world.
3.Business Model (WTF Do They Even Do?)
Alkem makes and sells:
- Formulations– Tablets, capsules, injectables across anti-infectives, GI, pain management, vitamins, minerals, chronic therapies.
- Nutraceuticals– Because
- sometimes you just need a vitamin pill in shiny packaging.
- APIs– Not their core, but enough to keep control over costs and supply.
Domestic sales dominate, but exports (US, Australia, EU, emerging markets) are growing. They balance branded generics in India with generics abroad — the former gives pricing power, the latter gives volume stability.
4.Financials Overview
- Revenue (FY25): ₹12,965 Cr (+2% YoY)
- EBITDA (FY25): ₹2,512 Cr (~19% margin)
- Net Profit (FY25): ₹2,215 Cr
- TTM PAT: ₹2,333 Cr
- EPS (TTM): ₹191.08
- P/E Recalc: ₹5,149 ÷ ₹191.08 ≈26.9x
- ROE: 19.4%
- ROCE: 20.4%
Verdict: Premium valuations, but matched with premium returns.
5.Valuation (Fair Value RANGE)
| Method | Inputs & Assumptions | Implied Value (₹) |
|---|---|---|
| P/E Multiple | Sector avg ~25x, EPS ₹191.08 | 4,600–4,900 |
| EV/EBITDA | Sector avg ~16x, EBITDA ₹2,643 Cr → EV ₹42,288 Cr | 4,700–5,100 |
| DCF | 8% CAGR 5 yrs, terminal growth 4%, WACC 11% | 4,800–5,200 |
Fair Value Range:₹4,600 –
