Alkem Laboratories Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹5,050.00−₹70.50 (−1.38%)

DalalBaazaar Score

77 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. The direction of profits is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:27 pm

Understanding the Business

Company site ↗

The 60-second version of Alkem Laboratories Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Alkem Laboratories Limited, a pharmaceutical company, engages in the research and development, manufacture, and sale of pharmaceutical and nutraceutical products in India, the United States, and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees19,346

Annual revenue₹14,532 Cr

How does it make money?

Turns over ₹14,532 Cr a year. Of every ₹100 of sales, about ₹16 reaches shareholders as profit, with ₹24 left at the operating level before interest, tax and depreciation. Each of its 19,346 employees supports ₹75.1 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹75.1 lakh

Who are its competitors?

The closest listed comparisons in its industry are SUN PHARMACEUTICAL IND L, DR. REDDY S LABORATORIES, CIPLA LTD, DIVI S LABORATORIES LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 18.6% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE14.5%

What is the outlook?

19 analysts covering the stock expect revenue to grow about 11.4% and earnings to grow about 17.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+11.4%

Est. earnings growth+17.4%

Analysts19

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +27% while net margin moved +84% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+27%

Margin effect+84%

DalalBaazaar Score

77/ 100

Good

Weighted across six categories. Every point is explained below.

• P/E of 28.0x already prices in growth
• P/E is close to its own historical median of 33.7x

Quality vs. Valuation

Company Quality

82/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

60/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

28.0x

3Y Median

33.7x

40 monthly readings · mean 39.5x · range 26.2x–64.5x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 17% below its 3y median of 33.7x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 16% below the peer median of 33.3x.

vs. its own history

Fair

33.7x median over 40 months · -17%

vs. sector peers

Fair

33.3x median of 4 peers · -16%

vs. generic bands

Fair

15x–35x

EV/EBITDA

17.8x

PEG

0.85

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 15.7% to 24.0% over 3 years.
Return on equity is rising
ROE has improved from 10.9% to 16.7%.
Return on capital is rising
ROCE has improved from 13.9% to 18.6%.
Very low debt
Debt/Equity of 0.14x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

1 item require attention · 1 watch

🟡Debt is increasingFinancial
Total debt is up 47% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 18.6% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 15.7% to 24.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹1,346 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

No clear risk case emerges from the available numbers — which is not the same as there being none.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 22%✓ 24.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 6% a year✓ 8.3% CAGR
Latest reported year was 10.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹1,346 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 16%✓ 18.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 4 neutral · 1 weak

Market Cap

₹60,380 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

28.0x

Fair

Fairly valued against the generic band

P/B Ratio

4.37x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹180.44

Profitable

Profitable on a per-share basis

ROE

16.7%

Strong

Strong capital efficiency

ROCE

18.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.14x

Low

Conservative leverage

Revenue Growth (YoY)

10.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-21.7%

Falling

Profits are shrinking

Dividend Yield

0.40%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹1,346 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

22.6x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

17.8%

Good

Healthy core-business profitability

Net Margin

14.3%

Good

Strong bottom-line conversion

Current Ratio

2.55

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.29

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

5258.9 / 5304.8

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

38.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹11,440 Cr	₹12,439 Cr	₹12,805 Cr	₹14,532 Cr	+8.3%
EBITDA	₹1,796 Cr	₹2,528 Cr	₹2,928 Cr	₹3,491 Cr	+24.8%
EBITDA Margin	15.7%	20.3%	22.9%	24.0%	—
PAT (Net Profit)	₹984 Cr	₹1,796 Cr	₹2,165 Cr	₹2,302 Cr	+32.7%
EPS	₹82.31	₹150.19	₹181.11	₹192.51	+32.7%
ROE	10.9%	17.4%	18.1%	16.7%	—
ROCE	13.9%	18.3%	19.0%	18.6%	—
Total Debt	₹1,397 Cr	₹1,418 Cr	₹1,381 Cr	₹2,047 Cr	+13.6%
Free Cash Flow	₹1,450 Cr	₹1,689 Cr	₹1,237 Cr	₹1,346 Cr	-2.4%

🟢 Revenue has grown at 8.3% a year over 3 years.

🟢 EBITDA has grown at 24.8% a year over 3 years.

🟢 EBITDA Margin has risen from 15.7% to 24.0% over 3 years (+8.3 pts).

🟢 PAT (Net Profit) has grown at 32.7% a year over 3 years.

🟢 EPS has grown at 32.7% a year over 3 years.

🟢 ROE has risen from 10.9% to 16.7% over 3 years (+5.8 pts).

🟢 ROCE has risen from 13.9% to 18.6% over 3 years (+4.6 pts).

🔴 Total Debt has grown at 13.6% a year over 3 years.

🔴 Free Cash Flow has shrunk at 2.4% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹20,873 Cr

Total Liabilities

₹6,524 Cr

Cash & Equivalents

₹248 Cr

Operating Cash Flow

₹1,963 Cr

Capex

-₹617 Cr

Shareholding (proxy)

Institutional Holding

28.4%

Insider Holding

61.4%

Corporate Actions

Next Earnings

12 Nov 2026

Dividend Rate

₹20

Ex-Dividend Date

07 Aug 2026

Analyst Consensus

Recommendations

14 Buy · 4 Hold · 2 Sell

Target Price (Mean)

₹6,002.55

+18.9% vs CMP

Target Range

₹4,590 – ₹6,850

Peer Comparison

Company	P/E	ROE
SUN PHARMACEUTICAL IND L	34.9x	14.5%
DR. REDDY S LABORATORIES	31.0x	8.8%
CIPLA LTD	31.8x	9.8%
DIVI S LABORATORIES LTD	83.0x	17.5%

Recent News

2 positive1 mixed3 general

Alkem Laboratories Share Price

Upstox, 16 Oct

ALKEM Outlook for the Week

Equitypandit, 09 Oct

Five reasons behind Investec's upgrade of Alkem Labs, and why JPMorgan is cautious

CNBC TV18, 17 AugAnalyst view

🟢Potentially positiveAn analyst opinion changing, which moves the price without changing the business.

Alkem Laboratories Limited (NSE:ALKEM) Looks Interesting, And It's About To Pay A Dividend

Simply Wall Street, 04 AugCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

ALKEM Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Alkem Laboratories to hold EGM on Aug 17 for amalgamation with Adroit Biomed

scanx.trade, 05 Oct

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability · Risk

MiddlingValuation

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself.

All 5 tripwires holding · see Key things to watch ↑