Add Alkem Laboratories Ltd for the Target Rs. 5,755 by Choice Institutional Equities
Key Conference Call Highlights
India Business
* India business recorded strong momentum with sales growing 9.7% YoY in FY26 and continued to outperform the Indian Pharmaceutical Market (IPM).
* Outperformed the Indian Pharmaceutical Market (IPM) in six therapy areas, including Gastrointestinal, Vitamins and minerals, Pain, Anti-diabetic, Respiratory and Dermatalogy.
* The management reiterated the company will outgrow IPM by 100– 150 bps consistently.
* The management highlighted that Semaglutide has emerged as a key growth driver, achieving around 11% market share, with the expectation of further scale-up in coming quarters.
* Total MR count stands at ~14,500, with attrition at 18–19%, well below the industry average; incremental hiring is focussed on the chronic segment where growth opportunity is the highest.
US Business
* The management guided for high single-digit growth on a dollarto-dollar basis, with forex tailwinds expected to provide an additional boost over and above that.
* The management expects to launch Tolvaptan in the US market around September 2026, highlighting that it remains a limited competition opportunity as compared to typical generic launches.
* The company indicated that value erosion in the base US generics business continues, but this is anticipated to be offset through differentiated launches and pipeline addition.
* The company plans to file for Semaglutide in the US market in approximately 18 months, as part of its longer-term GLP-1 strategy.
Rest of the World (RoW) Business
* The management guided for high-teens growth in Rest of the World (ROW) markets in FY27E, consistent with recent performance trends.
* The company indicated that Semaglutide expansion into ROW markets is under evaluation, with filings and commercialisation plans anticipated in the next few quarters after ensuring domestic supply stability.
Outlook
* The management targets maintaining EBITDA margin in the 20– 21% range, though clarity on geopolitical-driven cost pressure will emerge progressively through the year.
* Rising API prices, packaging material cost and logistics cost due to the ongoing global conflict are anticipated to create near-term margin pressure, particularly in Q1FY27E.
* R&D spending is projected to remain stable at 4–5% of revenue, with continued investments in biosimilars, specialty products and differentiated pipelines.
* No major acquisition is planned in the next 12 months, with strategic focus shifting towards integrating Occlutech acquisition with MedTech platform.
* The company projects its effective tax rate to be at 27–29% in FY27E.
* The Occlutech acquisition is expected to close within the next 45– 60 days and will be fully consolidated from Q2FY27E.
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SEBI Registration no.: INZ 000160131
