According to reports from Alkem Laboratories, the pharmaceuticals company reported mixed financial results for Q1 FY27 ended June 30, 2026. Shares of Alkem Laboratories traded 2.74% lower on Friday, August 14, following the company's earnings announcement. The company's consolidated net profit declined 21.7% year-on-year to ₹520 crore compared to ₹664 crore in the corresponding period last year. Despite the profit decline, revenue from operations grew 11% to ₹3,740 crore from ₹3,371 crore in the year-ago quarter, indicating strong top-line performance with India sales growing 10.3% year-on-year to ₹2,498 crore and international sales rising 16% to ₹1,222 crore. The contribution of domestic sales to total sales was 67.1%, compared to 68.2% in Q1 FY26. Shares gained 1.1% on Monday, August 17, following Investec's upgrade to 'buy' rating with a revised price target of ₹6,400, implying 19% upside potential from previous levels.
Nomura retained its 'Buy' rating on Alkem Laboratories but lowered its September 2027 target price to ₹6,850 from ₹6,400, citing improved prospects from the Occlutech acquisition. The brokerage noted that Alkem's Q1 FY27 results "missed Street estimates" with revenue, EBITDA and PAT coming in 1%, 6% and 10% below consensus estimates respectively. Nomura attributed the miss to slower domestic growth and elevated operating costs, while raising its FY27-28F sales estimates by 7%-8% to incorporate Occlutech's contribution from Q2 FY27. The brokerage models Occlutech revenue at ₹3.8 billion/₹5.5 billion/₹6.0 billion and EBITDA margins at 0%/1.8%/8.3% for FY27F/28F/29F respectively. Nomura expects Alkem to sustain above-market growth in India over the medium term, noting the company is outpacing the broader market in most key therapy segments.
As reported by Alkem Laboratories, the company's operating performance remained positive with EBITDA increasing 4% to ₹766 crore against ₹739 crore in the year-ago quarter. However, EBITDA margin contracted to 20.48% in Q1 FY27 from 21.92% in Q1 FY26, indicating some margin compression despite the overall growth. The margin decline reflects the company's increased investment in research and development activities. R&D expenses for Q1 FY27 were ₹150 crore, representing 4% of total revenue from operations, compared to ₹118 crore (3.5% of revenue) in Q1 FY26, showing a significant increase in research investment. Nomura noted that gross margin expanded both year-on-year and quarter-on-quarter supported by favourable product mix and currency tailwinds, while EBITDA margin contracted year-on-year due to sharp rise in overheads as the company scaled investments in new business verticals.
According to the latest results, Alkem's US sales stood at ₹744 crore in Q1 FY27, registering 6.5% year-on-year growth, with the US business contributing 20% to total sales during the quarter, compared with 21% in Q1 FY26. Non-US sales grew 34.5% YoY to ₹478.5 crore, with their contribution to total sales increasing to 12.9% from 10.8% in Q1 FY26. During the quarter, the company received five ANDA approvals for the US market, including one tentative approval, demonstrating strong regulatory progress. Nomura expects the company's US business excluding CDMO to achieve sales of $335 million/$343 million/$351 million for FY27F/28F/29F respectively. The brokerage noted that its estimates do not factor in material upside from gJynarque or other potential niche opportunities. Investec expects the company's US business to grow mid-to-high single-digit, healthy double-digit growth for ROW, and the CDMO business to break even.
According to the company's results, tax expense increased significantly to ₹251 crore from ₹103 crore in the corresponding quarter of the previous year, contributing to the bottom-line decline. Alkem Laboratories announced plans to set up a new block within the existing manufacturing facility at Baddi, Himachal Pradesh for which they have approved an investment of up to ₹75 crores. The company stated that the trading window will reopen on August 17, as reported in their regulatory filing.
As reported by Alkem Laboratories, MD Sandeep Singh commented that the company has started FY27 on a steady note with healthy growth across India and international businesses. He noted that the India business continued to outperform the market while strong growth in non-US international markets was encouraging. Singh emphasized the need to improve execution, address operational and regulatory priorities, and ensure more consistent performance across the company's businesses. The company is also investing in R&D, MedTech and Biotech as it looks to build new growth opportunities while strengthening its core businesses. Nomura expects Alkem's gross margin to hold steady at current levels and EBITDA margin to expand sustainably in the years ahead as operating leverage materializes. The brokerage assesses a fair-value range of 26-33x one-year forward earnings, underpinned by approximately 70% earnings contribution from the domestic branded segment and potential upside from traction in CDMO and MedTech areas.
