ALKEM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.0
| Stock Code | ALKEM | Market Cap | 64,565 Cr. | Current Price | 5,400 ₹ | High / Low | 5,934 ₹ |
| Stock P/E | 29.2 | Book Value | 1,143 ₹ | Dividend Yield | 0.83 % | ROCE | 19.5 % |
| ROE | 19.9 % | Face Value | 2.00 ₹ | DMA 50 | 5,456 ₹ | DMA 200 | 5,445 ₹ |
| Chg in FII Hold | 0.18 % | Chg in DII Hold | -0.15 % | PAT Qtr | 654 Cr. | PAT Prev Qtr | 724 Cr. |
| RSI | 48.7 | MACD | -2.37 | Volume | 1,54,870 | Avg Vol 1Wk | 1,42,558 |
| Low price | 4,716 ₹ | High price | 5,934 ₹ | PEG Ratio | 2.09 | Debt to equity | 0.06 |
| 52w Index | 56.2 % | Qtr Profit Var | -3.35 % | EPS | 196 ₹ | Industry PE | 30.1 |
📊 Financials: ALKEM demonstrates strong fundamentals with ROE at 19.9% and ROCE at 19.5%, reflecting efficient capital utilization. Debt-to-equity ratio of 0.06 highlights a virtually debt-free balance sheet. EPS of ₹196 supports robust earnings power, though quarterly PAT declined from ₹724 Cr. to ₹654 Cr. (-3.35%).
💹 Valuation: Current P/E of 29.2 is aligned with industry average (30.1), suggesting fair valuation. PEG ratio of 2.09 indicates moderate overvaluation relative to growth. P/B ratio (~4.7) is reasonable compared to book value ₹1,143, offering valuation comfort.
🏢 Business Model: ALKEM operates in pharmaceuticals, benefiting from strong demand in generics and specialty drugs. Competitive advantage lies in diversified portfolio, global presence, and efficient capital use. Strong fundamentals support long-term sustainability despite short-term profit decline.
📈 Entry Zone: Ideal entry closer to ₹5,000–5,200, near DMA 200 (₹5,445) and support levels. Current price ₹5,400 is slightly above fair accumulation zone, making staggered buying advisable.
📌 Long-Term Holding: Suitable for long-term investors (3–5 years). Strong fundamentals and near debt-free status support holding, with partial profit booking recommended near ₹5,900–6,000 resistance levels.
Positive
- Strong ROE (19.9%) and ROCE (19.5%)
- Near debt-free balance sheet (Debt-to-equity 0.06)
- EPS of ₹196 reflects strong earnings power
- FII holdings increased (+0.18%), showing foreign investor confidence
Limitation
- Quarterly PAT decline (-3.35%)
- PEG ratio of 2.09 indicates moderate overvaluation
- DII holdings decreased (-0.15%)
- MACD (-2.37) and RSI (48.7) show neutral-to-weak momentum
Company Negative News
- Quarterly profit decline from ₹724 Cr. to ₹654 Cr.
- Domestic institutional selling (-0.15%)
Company Positive News
- Strong efficiency metrics (ROE/ROCE)
- Debt-free balance sheet supports financial stability
- FII holdings increased (+0.18%)
Industry
- Pharmaceutical sector remains resilient with long-term demand
- Industry P/E at 30.1, aligned with company valuation
Conclusion
ALKEM is a fundamentally strong pharma stock with efficient capital use, near debt-free status, and robust EPS. Entry is recommended around ₹5,000–5,200 for better margin of safety. Long-term investors can hold for 3–5 years, with partial exits near ₹5,900–6,000. Monitoring quarterly earnings will be key to sustaining valuation strength.