Motilal Oswal is bullish on Alkem Laboratories has recommended buy rating on the stock with a target price of Rs 2365 in its research report dated February 08, 2019.
Motilal Oswal's research report on Alkem Laboratories
Revenue grew 10% YoY to INR19.3b (our estimate: INR18.9b) in 3QFY19, led by strong 44% YoY growth in the US business (27% of sales). This, however, was partly offset by de-growth of 1% YoY in the domestic formulation business (DF; 66% of sales). Growth in the US was driven by healthy traction in the existing portfolio, new launches and the favorable currency impact. DF business was impacted by (a) FDC ban on select products, (b) the relatively weak season for anti-infective medicines, (c) slower trade generics business and (d) the high base (GST-led normalization in 3QFY18).
Outlook
We also roll our TP to 24x (unchanged) 12M forward earnings to INR2,365 (prior: INR2,500). We expect a sustained outperformance in the DF business and better profitability in the US business, going forward. Maintain Buy.
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