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Alkem Laboratories Ltd Research Report - 03rd Jan 2017

Pharmaceutical | Published on Jan 03rd 2017


Alkem Laboratories is a Mumbai based pharma company engaged in manufacturing and marketing of generic drugs, APIs and neutraceutical products. Company sells its drugs in India and ~50 countries including the US. It has 16 manufacturing facilities of which 14 are in India and two in the USA. The stock at the CMP of Rs1,620 is available at P/E of 15.5x of FY19E EPS of Rs105, which is at ~15% discount to average P/E (18.4x) of the peer group. In our view this discount is unwarranted considering 1) Strong earnings momentum (CAGR of 22.3% in PAT from FY16-FY19E vs. CAGR of 18.3% from FY11-FY16), 2) Improving RoE (average 21.5% RoE from FY17EFY19E) and 3) Increasing ANDA pipeline and near term launches in the US. We rate Alkem ‘Buy’ with a price target of Rs1,989 (19.0x of FY19E earnings).

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CMP 1,620
Target Price 1,989
Investment Period12 Months

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Shareholding Pattern (%)

Public & Others25.0
Grand Total100.0

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