Alkem Labs Q2 Results Review - Strong Operating Leverage Drives Profitability: Motilal Oswal

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Alkem Laboratories Ltd. delivered a strong beat on Q2 FY24 earnings. An improved performance in the U.S. generics and moderating raw material costs led the sharp improvement in operating margins for the quarter. Given the surplus cash, Alkem is looking for inorganic opportunities in chronic therapies and the consumer healthcare space.We raise our earnings estimates by 21%/11% for FY24/FY25 factoring in:increased share of relatively high-margin products in the U.S. generics segment,benefits from reduced raw material costs, andreduction in effective tax rate. We value Alkem Labs at 22 times 12 months forward earnings to arrive at our target price of Rs 3,920.We expect 28% earnings compound annual growth rate over FY23-25 on the back of 11%/10% sales CAGR in the U.S. generics/domestic formulation segments and 350 basis points margin expansion. Even the price/earning 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'..Click on the attachment to read the full report:.Divi's Labs Q2 Results Review - Pricing Pressure In API Segment Hurts Profitability: Motilal Oswal.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Alkem Labs Q2 Results Review - Strong Operating Leverage Drives Profitability: Motilal Oswal

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