Buy Alkem Laboratories; target of Rs 6600: ICICI Securities

ICICI Securities's research report on Alkem Laboratories

Alkem Laboratories (Alkem) delivered a strong Q2FY26 result led by traction across regions. Growth in India biz (+12% YoY) was led by better traction in chronic therapies and recent foray in medical devices segment, while new launches including gEntresto boosted US revenue (+28%). EBITDA margin scaled up 97bps on lower R&D and operating leverage. While Alkem is expensing the cost of operating the newly set up medtech division, the impact of CDMO plant in the US is yet to hit the P&L. Owing to the added cost and reduction in GST incentive for the Sikkim facility, management maintains its cautious outlook on margins and expects it to be 19.5-20% in FY26 (22.5% in H1FY26). Raise FY26/27E EPS by ~3-4% to factor in better margins.

Outlook

Maintain BUY on attractive valuations with higher TP of INR 6,600 based on 23x FY27E EV/EBITDA.