Active Stocks
Thu Jun 20 2024 12:14:33
  1. Tata Steel share price
  2. 181.90 1.03%
  1. HDFC Bank share price
  2. 1,666.45 0.51%
  1. ITC share price
  2. 424.90 0.28%
  1. Bharti Airtel share price
  2. 1,381.00 -0.87%
  1. Tata Motors share price
  2. 982.10 0.48%
Business News/ Markets / Stock Markets/  Alkem Laboratories share price declines 9% post Q4 results: Should you Buy, Sell or Hold the stock?
BackBack

Alkem Laboratories share price declines 9% post Q4 results: Should you Buy, Sell or Hold the stock?

Stock Market Today: Alkem Laboratories share price dipped more than 9% in the opening trades on Thursday post Q4 results on Wednesday. Should you Buy, Sell or Hold the stock?

Alkem Laboratories share price dipped more than 9% in the opening trades on Thursday post Q4 Result tPremium
Alkem Laboratories share price dipped more than 9% in the opening trades on Thursday post Q4 Result t

Stock Market Today: Alkem Laboratories share price dipped more than 9% in the opening trades on Thursday post Q4 results that were declared by the company on Wednesday.

Alkem Laboratories share price opened at 5,120.00, lower over the previous day's close of 5,262.45. Alkem Laboratories share price thereafter slipped further to lows of 4,894.60 on the NSE on Thursday.

Weak India sales impact revenue growth

The revenue from operations for Alkem Laboratories, the domestic multinational pharmaceutical manufacturer, at 2935.8 crore could grow just 1.1% year-on-year growth (down 12% sequentially, disappointing the investors.

Also read- Edelweiss Financial share price cracks 17% after RBI action on ECL, EARCL

India sales at 1972.4 crore registered a de-growth of 1.9% year-on-year

International sales though at 909.6 crore marked year-on-year growth of 6.1%, cushioned the revenue decline.

Alkem Laboratories however had reported three-fold increase in consolidated net profit to 293.56 crore ,for the fourth quarter of fiscal year 2024. The same was also helped by derecognition of deferred tax during the same period last fiscal year.

The Earnings before interest Tax depreciation and amortisation (EBITDA) as per the company at 402 Crore grew 13.8% year on year

Earnings Miss estimates

Alkem Laboratories 4QFY24 revenues at 2935.8 Crore came 8% below our estimates said analysts at Jefferies India Pvt Ltd. The Ebitda at 402 Crore ( down 43% sequentially) was 13% below their estimates. The Net profit at 293.56 crore down 51% sequentially was 15% below their estimates. Net profit as per analysts was impacted by impairment loss associated with Indore plant and St Louis, USA plant.

Also Read- Emami share price jumps over 18% to 52-week after Q4 results; Should you buy the FMCG stock?

EBITDA margin in 4Q were at 13.7% compared to 21.3% in Q3 and 12.2% in 4QFY23, which were impacted due to lower sales in the quarter, said analysts

Analysts Cautious

Analysts at Antique Stock Broking in their post results report said that the decline in India business came as a negative surprise to us as it dragged the overall Ebitda margin to ~14%. Besides India, US generics also saw a sequential decline on account of seasonality and sustained price erosion. Analysts at Antique Stock Broking though expect Alkem's revenue to grow at ~9% CAGR over a two-year period and along with prudent expenditure management, they expect the Ebitda margin to improve and sustain at ~20% for FY25 and FY26. However they believe the stock trades at an expensive valuation of 20 times Enterprise Value by Ebitda and 26 times price to earnings based on FY26 estimates with the risk of underperformance of the India business.

Also Read- Lok Sabha Elections 2024: Defence, power, industrials among sectors to bet on ahead of election result

Analysts at Jefferies said that Alkem Laboratories has been struggling for quite some time on growth as well as normalization of its Ebitda margin, and we see no strong reason for either of them to change in near term. They have cut FY25 and FY26 Earnings per share estimates by 5-6%.

Analysts at Motilal Oswal Financial Services have reduced their earnings estimate by 4% and 2% respectively for FY25 and FY26 respectively, factoring in increased operating expenses related to the Enzene facility in the US, and higher product development spend. The MOFSL analysts who have Neutral ratings on the stock say that they expect 10% earnings CAGR (compound annual growth rate) over FY24-26, backed by 12% and 20% sales CAGR in Domestic Formulations Ex-US exports business and stable margins.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions

 

 

 

3.6 Crore Indians visited in a single day choosing us as India's undisputed platform for General Election Results. Explore the latest updates here!

ABOUT THE AUTHOR
Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 30 May 2024, 09:34 AM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started