Alkem Labs plunges more than 13%, sees biggest single-day fall in over 3 years on tax evasion allegation

MUMBAI - Shares of Alkem Laboratories nosedived more than 13% on Monday, witnessing their biggest single-day fall in at least three years, following reports of a large-scale tax evasion by the drug major.

According to reports, Alkem Labs allegedly claimed over Rs 1,000 crore in bogus deductions.

In September last year, the tax department conducted surveys on the offices and premises of the company after receiving intelligence regarding a large amount of tax evasion.


Shares of the company were trading 12% down at Rs 4,787.25 amid strong volumes of more than 9,74,000 shares.

While the stock has been caught in a bear trap, it was one of the best performing stocks in the pharmaceutical space in 2023. The stock gave more than 73% returns to investors in 2023. Before today’s fall, the stock was net positive in 2024, giving a little over 4% returns.

Post the December quarter earnings, most analysts held a positive view on the stock.

Nuvama Institutional Equities had raised the valuation multiple for the stock to 29 times from 28 times price-to-earnings, while increasing earnings estimates for both FY24 and FY25 by 18% each to factor in operational improvements and lower tax.

Subsequently, its price target for the stock was increased sharply to Rs 6,130 from Rs 4,980 by the brokerage firm.


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