Dolat Capital: Alkem Laboratories Q1 Review - Exports Steal Show, India Led By Generics

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Dolat Capital Report

Alkem Laboratories Ltd. has built a decent platform for growth in the U.S. with its diversified manufacturing base (six Food and Drug Administration approved facilities including two in the U.S.), pipeline of approximately 90 abbreviated new drug applications (ANDAs) (only 50% commercialized) and front-end presence.

U.S. business targets 12-15 filings and approximately 10 launches per annum. This is likely to lead to Ebitda margin improvement of 180 basis points over FY20-22E and move closer to aspirational target of 20% Ebitda margins.

Moderating capex, compliant facilities and improving profitability in the U.S. is expected to boost free cash flow/Ebitda conversion rate at approximately 70% by FY22E.

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