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Accumulate Alkem Laboratories; target of Rs 2515: Dolat Capital

Dolat Capital recommended accumulate rating on Alkem Laboratories with a target price of Rs 2515 in its research report dated June 05, 2020.

June 07, 2020 / 08:12 PM IST
 
 
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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).



For all recommendations report, click here


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Broker Research
first published: Jun 7, 2020 08:12 pm

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