Getty ImagesMotilal Oswal has given buy rating to Alkem Laboratories with a target price of Rs 3665. The share price moved down by 0.74 per cent from its previous close of Rs 2980.30. The stock’s last traded price is Rs 2958.30.
Alkem Laboratories Ltd., incorporated in the year 1973, is a Large Cap company (having a market cap of Rs 35546.08 Crore) operating in Pharmaceuticals sector.
Financials
For the quarter ended 31-03-2020, the company reported a Consolidated sales of Rs 2048.99 Crore, down 6.09 % from last quarter Sales of Rs 2181.84 Crore and up 10.51 % from last year same quarter Sales of Rs 1854.20 Crore Company has reported net profit after tax of Rs 191.54 Crore in latest quarter.
Investment Rationale
The brokerage expects 24% earnings CAGR over FY20-22E, led by 16%/8% sales CAGR in the US/DF generics on new launches and better traction in existing products. The reduced promotional expense in DF and improving profitability in the US should drive 520bp margin expansion over FY20-22E. It has raised EPS estimates by 30%/15% for FY21/FY22E to factor in cost saving on enhanced use of digital promotions/reduced travelling expenses, and robust traction in US generics (driving revenue growth as well as profitability). Accordingly, it has revised price target to INR 3,665 on 23x 12-month forward earnings.
Promoter/FII Holdings
Promoters held 62.4 per cent stake in the company as of June 30, 2020, while FIIs held 3.5 per cent, DIIs 12.3 per cent and public and others 21.8 per cent.
Alkem Laboratories Ltd., incorporated in the year 1973, is a Large Cap company (having a market cap of Rs 35546.08 Crore) operating in Pharmaceuticals sector.
Financials
For the quarter ended 31-03-2020, the company reported a Consolidated sales of Rs 2048.99 Crore, down 6.09 % from last quarter Sales of Rs 2181.84 Crore and up 10.51 % from last year same quarter Sales of Rs 1854.20 Crore Company has reported net profit after tax of Rs 191.54 Crore in latest quarter.
Investment Rationale
The brokerage expects 24% earnings CAGR over FY20-22E, led by 16%/8% sales CAGR in the US/DF generics on new launches and better traction in existing products. The reduced promotional expense in DF and improving profitability in the US should drive 520bp margin expansion over FY20-22E. It has raised EPS estimates by 30%/15% for FY21/FY22E to factor in cost saving on enhanced use of digital promotions/reduced travelling expenses, and robust traction in US generics (driving revenue growth as well as profitability). Accordingly, it has revised price target to INR 3,665 on 23x 12-month forward earnings.
Promoter/FII Holdings
Promoters held 62.4 per cent stake in the company as of June 30, 2020, while FIIs held 3.5 per cent, DIIs 12.3 per cent and public and others 21.8 per cent.