ICICI Securities is bullish on Alkem Laboratories has recommended buy rating on the stock with a target price of Rs 3500 in its research report dated August 09, 2020.
ICICI Securities research report on Alkem Laboratories
Alkem Laboratories (Alkem) reported Q1FY21 performance significantly above our estimates on profitability front with beat of 2/85/112% on revenue/EBITDA/PAT front. Revenue growth was heathy at 8.3% YoY to Rs20.0bn (I-Sec: Rs19.6bn) driven by 38.3% increase in US sales. India business contributed ~58% to the revenues and we believe it would be the key value driver for Alkem, though India sales were down 5.5% in Q1FY21 impacted by lockdown. EBITDA margin improved 1,230bps YoY to 26.6% largely driven by impressive cost control with 930bps decline in S,G&A expenses.
Outlook
We remain positive on the long-term outlook given sustainable growth in the domestic market and continued scale-up in US generic business, though near term outlook remains uncertain considering its large acute portfolio. Reiterate BUY.
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