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Motilal Oswal Report
Considering the front-loading of opex in new business initiatives like Enzene CDMOs and enhanced efforts to improve profitability of med-tech business, Motilal Oswal expects Alkem Laboratories Ltd.'s earnings to decline in FY27 and subsequently revive FY28 onward. The valuation leaves limited upside from the current levels, hence the brokerage maintain Neutral rating on the stock, but has raised its target price implying a potential upside of 7% from current levels.
Alkem delivered in-line revenue and Ebitda/PAT beat of 16%/19% in Q1 FY27, driven by improved segmental mix and higher-than-expected operating leverage.
Notably, Alkem achieved the highest quarterly gross margin in the past 10 years. Additional cost related to newer business (CDMO) dragged down Ebitda growth for the quarter.
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