Earnings Outlook
Alkem Labs Jul-Sept consol PAT seen up 10% YoY
This story was originally published at 22:19 IST on 19 October 2024
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By Narayana Krishna
HYDERABAD - Alkem Laboratories Ltd is expected to report lower single digit growth in revenue for Jul-Sept, largely due to lower sales in the US market and price erosion, analysts said. The company is expected to report a consolidated net profit of INR 6.8 billion for the September quarter, up 10% on year, with the revenue growing 4% on year to INR 35.7 billion, according to an average of estimates from six brokerages.
In Jul-Sept a year ago, the company reported a net profit of INR 6.2 billion on revenue of INR 34.4 billion. Sequentially, the net profit is seen increasing 25%, while revenue is seen up 18%, the estimates show. For Apr-Jun, the company reported a net profit of INR 5.5 billion on revenue of INR 30.3 billion.
Analysts' estimates for Alkem Laboratories Jul-Sept net profit range from INR 6.08 billion, the lowest by brokerage Nuvama Wealth, to INR 7.55 billion, the highest by Yes Securities. The estimates for revenue range from INR 34.63 billion, the lowest by Motilal Oswal, to INR 37.46 billion, the highest by Nuvama Wealth.
The Mumbai-based pharmaceutical and nutraceuticals manufacturer is yet to announce date for its Jul-Sept earnings.
Alkem Laboratories' domestic sales are projected to rise by 8-12% year-on-year, led by growth in India formulations business. HDFC Securities projects an 8% increase in domestic sales, while Nuvama Wealth and Yes Securities expect around 9-12% growth. However, growth in the domestic acute therapy segment may be moderate, with Motilal Oswal projecting only a 4% year-on-year increase, dampened by slower trade generics.
On the exports front, the company's US sales are likely to decline 12-13% year-on-year due to slower uptake of new launches and continued price erosion. However, on a sequential basis, there is optimism, with HDFC forecasting a 7% quarter-on-quarter growth in the US market, supported by strong traction in generic versions of Suprep and Pradaxa.
The US market revenue is expected to come in at $81 million-$82 million, with the decline in sales due to underperformance compared to the broader market, Nomura said.
Alkem's gross margins are expected to remain stable or slightly improve year-on-year, with forecasts ranging from 61.8% to 65%. However, higher costs related to growth initiatives are likely to put pressure on operating profits, analysts said.
Nuvama Wealth and Yes Securities project earnings before interest, tax, depreciation and amortisation or EBITDA margin to be around 19.9% to 23.3%, with HDFC expecting a year-on-year decline of 71 basis points. Nomura anticipates a 160-basis-point expansion in EBITDA margin.
Nuvama Wealth has pegged gross margins at 61.8%, with EBITDA margins at 19.9%, while Motilal Oswal expects the EBITDA margin to improve slightly to 22.9%, compared to 21.7% last year.
An average of estimates from six brokerages for Alkem Laboratories' September quarter EBITDA is pegged at INR 8.01 billion, while estimates range between INR 7.45 billion and INR 8.55 billion.
Market participants will watch out for strategy to improve US sales going forward, while an update on its biosimilar business, besides efforts to improve the margins.
Following are the Jul-Sept earnings estimates for Alkem Laboratories Ltd. based on reports compiled by Informist from six brokerage houses:
Broker name | Net Sales | Net Profit | EBITDA |
-------(In INR million)------- | |||
Antique Stock Broking Ltd | 35,156.00 | 7,114.00 | 8,350.00 |
HDFC Securities Ltd | 36,026.00 | 6,524.00 | 7,566.00 |
Motilal Oswal Financial Services Ltd | 34,632.00 | 6,564.00 | 7,931.00 |
Nomura Equity Research | 35,343.00 | 7,081.00 | 8,249.00 |
Nuvama Wealth Management Ltd | 37,456.00 | 6,076.00 | 7,448.00 |
YES Securities (India) Ltd | 35,373.00 | 7,546.00 | 8,545.00 |
Average | 35,664.33 | 6,817.50 | 8,014.83 |
Friday, Alkem Laboratories shares ended at INR 6.132.75 on the National Stock Exchange, up 1.8% from the previous close. End
Edited by Vandana Hingorani
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