Alkem Laboratories’ share price climbed 4.76% to Rs 4,219 after the company reported a 76.83% rise in consolidated net profit at Rs 614.89 crore for the second quarter of FY24 compared to Rs 347.72 crore in Q2FY23, in a regulatory filing. The company’s revenue stood at Rs 3,440.17 crore, up from Rs 3,079.37 crore a year ago. Expenses also rose slightly to Rs 2,797.66 crore from Rs 2,727.71 crore in the same period last year.
Alkem Laboratories’ shares have delivered remarkable returns to investors, with a 13% gain in the last five days, 19% in the last one month, 20.18% in the last six months, and a whopping 40.73% year-to-date.
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Should you buy, sell or hold Alkem Labs shares?
Motilal Oswal Financial Services: Neutral – Target Price: Rs 3920
“We expect 28% earnings CAGR over FY23-25 on the back of 11%/10% sales CAGR in the US generics/DF segments and 350bp margin expansion. Even the P/E multiple assigned is largely in-line with its five-year average. Considering these factors, we believe the current valuation adequately factors in the earnings upside. Reiterate ‘Neutral’. We raise our earnings estimates by 21%/11% for FY24/FY25 factoring in: 1) increased share of relatively high-margin products in the US generics segment, 2) benefits from reduced raw material costs, and 3) reduction in effective tax rate. We value Alkem Laboratories at 22x 12M forward earnings to arrive at our Target Price of Rs 3,920.”
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Choice Broking: Add – Target Price: Rs 4375
“We factor in the domestic and US growth guidance of high-single digits, allocation of capital towards the complex products, cost optimization measures which will improve margins going forward. We expect the Revenue/ EBITDA/ PAT to grow at a CAGR of 10.1%/19.1%/28.8% for FY23-26E. We introduce FY26 and value the stock on FY26E EPS to arrive at a target price of Rs 4,375 (valuing at 23x) with an ‘Add’ rating on the stock.”
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