Dolat Capital's research report on Alkem Laboratories
Exports leads Q4, growth outlook remains intact. Alkem reported an in-line operational performance despite a sharp miss in the gross margins while higher other income led to 8% miss in the PAT. Revenues (Rs 20bn, up 10% YoY) came in line with estimates as exports led the growth (India grew 3% YoY), gross margins at 56.3% (down 540bps QoQ and 180bps YoY) was impacted due to product mix (higher contribution from trade generics and competition in Mycophenolate in the US) coupled with higher API prices from China. Despite poor gross margins, lower fixed costs and employee expenses (15% cost is variable) led to EBITDA margins at 14.8% (up 210bps YoY). PAT at Rs 1.9bn beat our estimates by 8% led by higher other income.
Outlook
At CMP, the stock trades at 24x/21x FY21/22E EPS. Accumulate with a price target of Rs 2,515 (22x FY22E).
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