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Motilal Oswal Report
Alkem Laboratories Ltd. delivered better-than-expected Q1 FY24 performance, fueled by superior traction in international markets.
Alkem Labs' business growth was broad-based within international markets including the U.S., Chile, the UK, Kazakhstan and the Philippines.
We cut our earnings estimates by 7%/1% for FY24/FY25, factoring in:
unfavorable seasonality effect in domestic formulation segment,
increased tax rate, and
better prospects in bioscience segment as well as in international markets.
We value Alkem Labs at 21 times 12 months forward earnings to arrive at our target price of Rs 3,810.
While Alkem Labs continues to progress well in chronic segment (17-19% of branded generics part of DF sales), the growth prospects of acute segment remain volatile due to seasonality factor.
The exports (34% of Q1 FY24 sales) have seen healthy uptick from existing products. However, we await new approvals for sustainable growth.
Further, the valuation adequately factors in the upside in the earnings. Maintain 'Neutral'.
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