Alkem Laboratories Shares Slide 3% After Q2 Profit Declines 12% as Motilal Oswal Retains Neutral Rating
Shares of Alkem Laboratories slipped more than 3% in intraday trade on the National Stock Exchange (NSE), touching a low of Rs 5,140 per share after the drugmaker announced its financial results for the second quarter. The stock came under selling pressure as a decline in quarterly net profit offset healthy top-line expansion, prompting domestic brokerage Motilal Oswal Financial Services (MOFSL) to maintain its "Neutral" rating on the counter.
In late morning trade, the scrip was hovering at Rs 5,194, down 2.05% on the NSE, while the benchmark Nifty 50 traded 0.5% lower at 25,170.40.
Q2 Financial Highlights
For the July–September quarter, Alkem Laboratories reported an 11.73% year-on-year (YoY) contraction in consolidated net profit to Rs 675.34 crore, compared to Rs 765.06 crore posted in the corresponding quarter of the previous fiscal. The bottom line missed consensus market estimates, largely dragged down by front-loaded operating costs and integration expenses.
Key quarterly figures include:
- Consolidated Revenue: Grew 13.77% YoY to Rs 4,551.99 crore, compared with Rs 4,000.99 crore in the prior-year period. Sequentially, revenue advanced 21.7% from Rs 3,740.15 crore in Q1.
- Operating Profit (EBITDA): Stood at Rs 1,025.2 crore, up 22.5% YoY from Rs 920.8 crore.
- EBITDA Margin: Contracted by 50 basis points YoY to 22.5%, compared to 23% in the year-ago quarter.
- Domestic Sales: Increased 9.5% YoY to Rs 3,027.5 crore, supported by market outperformance in chronic therapies.
- International Sales: Rose 22.3% YoY to Rs 1,454 crore, driven by non-US markets which surged 58% to Rs 671 crore, while US sales grew 2.4% to Rs 783 crore amid ongoing price erosion.
Segment Performance and Strategic Integration
The company's domestic chronic portfolio expanded 22.4% YoY, outpacing the Indian Pharmaceutical Market (IPM) chronic growth of 16% by over 640 basis points. However, performance in trade generics remained relatively subdued.
In newer business divisions, biotechnology sales from Enzene fell 35% YoY to Rs 70.4 crore as the platform works toward commercial scale. Meanwhile, medical technology sales reached Rs 133 crore, reflecting the maiden consolidation of cardiovascular device company Occlutech. While Occlutech contributed to top-line figures, its consolidation and associated integration expenses diluted near-term margins.
Alongside the earnings release, Alkem's board approved the appointment of Gopal Kothari as Chief Financial Officer and Key Managerial Personnel, effective December 2, 2026, bringing over two decades of financial leadership to stabilize executive management.
Brokerage View: Consolidation Phase
Motilal Oswal Financial Services reiterated its "Neutral" rating on Alkem Laboratories, terming the current fiscal year a period of operational consolidation.
The brokerage highlighted that while the core domestic formulations franchise remains robust, earnings growth over the near term faces friction from front-loaded operating expenditure in Enzene CDMO, gestation timelines required to achieve operating breakeven in newer businesses, and regulatory remediation measures underway at its Daman facility. With management holding full-year EBITDA margin guidance between 20% and 21%, analysts view current stock valuations as fully reflecting near-term growth drivers, offering limited upside headroom in the immediate future.
