Buy Alkem; target of Rs 3870 : Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Alkem

Given the turmoil on the international front, the branded Domestic Formulation segment (DF) remains well protected. It is also on the growth path, with the easing of COVID-related restrictions. -ALKEM, which garners maximum sales from the DF segment (70% of total sales), is well-placed to reap better business prospects as compared to its peers. It also has multiple levers to outperform the India Pharma market (IPM) in the near to medium term. Sound compliance and steady approvals are helping to offset the intense price erosion impact in the US Generics segment. We cut our FY23/FY24 estimate by 6%/7% to factor in raw material and logistics-related headwinds. The stock is currently trading at attractive valuations of 21x/18x FY23E/FY24E EPS. We value ALKEM at 22x its 12-months forward earnings to arrive at our TP of INR3870. We remain positive on the back of its superior execution in the DF segment, positive benefit of inflation-linked price hike on products under NLEM, and consistent compliance track record. We reiterate our Buy rating.

Outlook

We value ALKEM at 22x 12-months forward earnings to arrive at our TP of INR3,870. Considering the minimal headwinds on the business front and attractive valuation, we reiterate our Buy rating on ALKEM.

More Info

At 16:01 hrs Alkem Laboratories was quoting at Rs 3,264.35, down Rs 6.90, or 0.21 percent.

It has touched an intraday high of Rs 3,276.65 and an intraday low of Rs 3,221.35.

It was trading with volumes of 2,630 shares, compared to its thirty day average of 2,290 shares, an increase of 14.83 percent.

In the previous trading session, the share closed up 2.97 percent or Rs 94.35 at Rs 3,271.25.

The share touched its 52-week high Rs 4,067.70 and 52-week low Rs 2,544.25 on 24 September, 2021 and 24 March, 2021, respectively.

Currently, it is trading 19.75 percent below its 52-week high and 28.3 percent above its 52-week low.

Market capitalisation stands at Rs 39,030.20 crore.

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