Alkem Laboratories (ALKEM) Q2 24/25 earnings summary

Executive summary

• Strategic initiatives and cost controls improved EBITDA margins, with a focus on high-margin product mix and domestic business as a key growth driver; international sales declined while domestic sales outperformed in several therapies.

• H1 FY25 revenue from operations grew 0.6% year-over-year to ₹64,465 million; net profit after minority interest rose 36% year-over-year in H1 FY25 and 11% in Q2 FY25.

• EBITDA margin improved to 21.1% in H1 FY25 (vs. 17.7% last year) and 22.0% in Q2 FY25 (vs. 21.7%).

• The Board approved a final dividend of ₹5 per share, ratified at the AGM.

• Domestic business outperformed IPM in key therapies; US business saw double-digit sales decline.

Financial highlights

• H1 FY25 EBITDA reached ₹13,615 million, up 19.9% year-over-year; Q2 FY25 EBITDA was ₹7,528 million, up 0.8% year-over-year.

• H1 FY25 gross profit margin rose to 64.6% (from 60.6%); Q2 FY25 gross margin at 64.7%.

• H1 FY25 net profit was ₹12,638 million, up 36% year-over-year; Q2 FY25 net profit was ₹6,886 million, up 11% year-over-year.

• EPS for H1 FY25 at ₹103.2 (up 36% year-over-year); Q2 FY25 EPS at ₹57.6 (up 11% year-over-year).

• Net cash position of ₹42.2 billion as of September 30, 2024.

Outlook and guidance

• Full-year revenue growth expected to be mid-single-digit due to US business weakness; EBITDA margin guidance raised to 18.5%-19%.

• Domestic business guidance maintained at 8%-9% annual growth, with Q4 expected to be strong.

• US business expected to see flattish to mid-single-digit decline for the year, with H2 performance anticipated to improve.

• Company continues optimizing manufacturing, including planned divestment of the Indore facility.