Alkem Laboratories (ALKEM) Q1 24/25 earnings summary

Executive summary

• EBITDA margin improved by 700 bps year-over-year to 20.1% in Q1 FY25, driven by product mix, cost control, and favorable API pricing.

• Net profit after minority interest for the quarter was INR 5,452 million, up 90.1% YoY.

• Domestic business remains a stronghold, with growth in large brands and portfolio expansion; emerging markets also targeted for growth.

• Standalone and consolidated unaudited financial results for the quarter ended 30 June 2024 were reviewed and approved, with auditors issuing unmodified review reports.

• Maintained a healthy balance sheet with net cash of ₹38.45 billion as of June 30, 2024.

Financial highlights

• Revenue from operations reached ₹30,318 million in Q1FY25, up 2.2% year-over-year.

• Gross margin for Q1 improved, with full-year guidance raised to 62%-62.5% (vs. 61% last year).

• Gross profit increased 10.6% YoY to ₹19,559 million, with gross margin rising to 64.5%.

• R&D expense expected at 4.5%-5% of sales for FY25, with Q1 at 4.1%.

• EPS for Q1FY25 was ₹45.60, up 90.1% YoY.

Outlook and guidance

• EBITDA margin guidance maintained at ~18% for FY25, factoring in investments in new business opportunities.

• Gross margin expected to improve by 100-150 bps year-over-year, but incremental costs from new initiatives and R&D will offset gains.

• India business expected to grow in line with market at 8%-10%.

• Continued focus on product launches and regulatory approvals in the US and other international markets.

• Non-US international business targeted for mid-teens growth over next 2-3 years.