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Informist, Tuesday, Feb. 10 2026

 

By Narayana Krishna

 

HYDERABAD - Despite growth in overall sales, weakness in the high-margin anti-infectives portfolio sales and increased operational expenditure are likely to impact Alkem Laboratories Ltd.'s December quarter consolidated net profit, according to analysts.

 

Alkem Laboratories is expected to report a fall of nearly 3% year-on-year in its consolidated net profit for the December quarter to INR 6.1 billion, according to the average of estimates from six brokerages. On a trailing basis, net profit is seen falling 21%, mainly due to higher expenses at its US biologics facility and a decline in margins, analysts said. The highest estimate for the company's bottom line is INR 7.5 billion from HDFC Securities Ltd. and the lowest is INR 4.6 billion from ICICI Securities Ltd.

 

The company's revenue is expected to rise nearly 11% on year to INR 37.3 billion, according to the estimates. On a trailing basis, revenue is expected to fall 7%. HDFC Securities has the highest estimate for the company's net sales at INR 38.7 billion, while Motilal Oswal Financial Services Ltd. has the lowest estimate at INR 36.7 billion. The year-on-year sales growth in the quarter is mainly driven by traction in India sales. Alkem Lab will announce its December-quarter earnings on Friday.

 

Alkem is expected to report an additional INR 500 million in expenditure related to its subsidiary, Enzene Biosciences Ltd., which will adversely affect profits. Enzene Biosciences is setting up a biologics plant in the US and costs are related to this project. The company is also expected to face intense competition for its heart medicine, the generic Entresto, in the US, which will drag its sales on a sequential basis, analysts said.

 

REVENUE GROWTH

Analysts expect Alkem Lab's India formulations business to remain the key growth driver in the December quarter, led by steady momentum in chronic therapies, though weakness in anti-infectives could cap upside.

 

HDFC Securities estimates around 12% year-on-year growth in the India formulations business, driven by strong performance in chronic segments, even as muted growth in anti-infectives may weigh on overall momentum. ICICI Securities is relatively conservative, projecting 9% on-year growth in domestic sales, while Motilal Oswal expects 8% year-on-year growth, citing continued pressure in the anti-infectives portfolio as a drag.

 

Brokerages expect the US business to deliver double-digit year-on-year growth, supported by new launches, though competitive intensity remains a key risk. HDFC Securities expects 19% year-on-year growth in the US business, aided by steady demand and incremental launches, with 4% quarter-on-quarter growth. ICICI Securities pegs US sales growth at 12% year-over-year.

 

Beyond India and the US, international markets are expected to contribute meaningfully to overall revenue growth. HDFC Securities expects 25% year-on-year growth in international markets excluding the US, while Motilal Oswal projects 22% on-year growth, driven by strong execution in Australia and select European markets. Nirmal Bang Equities Pvt. Ltd. estimates 10% year-on-year growth in the rest-of-the-world business.

 

MARGIN PRESSURE

While revenue growth remains healthy across geographies, analysts remain cautious on profitability and margins. Analysts expect margin contraction this quarter, as cost pressures from international operations and new-business initiatives partially offset the benefits from benign raw material costs and stable domestic pricing.

 

Higher operating expenses linked to the Enzene US plant and to its medical devices arm, Alkem MedTech Pvt. Ltd., coupled with changes in incentives in Sikkim, may impact profitability for the quarter, analysts said. These factors are expected to keep earnings before interest, tax, depreciation, and amortisation margin under pressure for the December quarter, analysts said. Analysts expect Alkem's December quarter EBITDA margin to be in the 19.3–22.5% range, down from 22.5% a year ago.

 

HDFC Securities sees December-quarter margins at 22.5%, largely flat year on year but down sequentially, as investments in growth initiatives weigh on operating leverage. Nuvama Wealth Management Ltd. projects 20?ITDA margin for the quarter, reflecting additional expenses linked to the Enzene US plant and contract manufacturing business. The average of estimates from six brokerages for Alkem Lab's December-quarter EBITDA is pegged at INR 7.6 billion.

 

Analysts will seek clarity on competition intensity in Entresto and the status of the Enzene plant. Market participants will await the management's comments on the outlook for the India and US launch pipeline.

 

Tuesday, the company's shares ended at INR 5811.50 on the National Stock Exchange, up 1.1% from the previous close. The stock has risen 1% since the announcement of its September quarter earnings.

 

Of the seven research reports on the company available with Informist, four have a 'buy' or equivalent recommendation on the stock with an average target price of INR 6,552, which is nearly 13% higher than the stock's closing price Tuesday. Of the remaining three, two have a 'hold' or equivalent recommendation and one has a 'sell' or equivalent call on the stock.

 

The Following are the Oct-Dec earnings estimates for Alkem Laboratories Ltd. from six brokerage firms in descending order by the estimate of net profit in INR billion:

 

Brokerage name	Net Sales	Net Profit	EBITDA
HDFC Securities Ltd	38.75	7.46	8.72
Nirmal Bang Equities Pvt Ltd	37.40	6.87	7.90
Nuvama Wealth Management Ltd	37.40	6.18	7.46
Motilal Oswal Financial Services Ltd	36.75	5.78	7.09
YES Securities (India) Ltd	36.85	5.46	7.29
ICICI Securities Ltd	36.80	4.61	7.29
Average	37.32	6.06	7.63

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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