ALKEM - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 4.0

Here’s an in-depth evaluation of Alkem Laboratories Ltd. (ALKEM) — a well-established pharmaceutical company with strong fundamentals and scalable operations.

💰 Core Financial Strength

ROE: 19.4% & ROCE: 20.4% — excellent capital efficiency, well above industry averages.

EPS: ₹181 — strong earnings power, supporting higher long-term valuations.

Debt-to-Equity: 0.12 — conservative leverage, balance sheet is in good shape.

Dividend Yield: 0.89% — modest payout, signaling profit retention for growth.

PAT Qtr: ₹306 Cr. (vs ₹626 Cr. previous) — flat quarterly variation; needs monitoring for seasonal or non-recurring factors.

📊 Valuation Metrics

Metric Value Interpretation

P/E Ratio 28.0 Lower than Industry PE: 34.0 — slight undervaluation

P/B Ratio ~5.06 Premium valuation — reflects market’s confidence

PEG Ratio 3.02 ⚠️ High — valuation rich relative to growth; caution on fresh entries

Intrinsic Value Close to CMP Supported by earnings power and low debt

🧬 Business Model & Strategic Edge

Core Focus: Formulations, domestic branded generics, and exports.

Significant presence in chronic therapy areas (neuro, oncology, anti-diabetic).

Manufacturing excellence and USFDA-compliant facilities aid global footprint.

Domestic Investors (DII) ↑ 2.38% — strengthening local institutional support.

Foreign Investors (FII) ↓ 0.29% — mild trimming, not necessarily bearish.

📈 Technical Indicators

RSI: 63.4 — in bullish territory; momentum is favorable.

MACD: 37.9 — strong positive crossover — uptrend confirmation.

Trading near DMA 50 & DMA 200 — poised for breakout continuation.

CMP ₹5,071, well off 52W low ₹4,492, but also below high ₹6,440 — upside potential intact.

🎯 Recommended Entry & Holding Strategy

Entry Zone: ₹4,950–₹5,050 — minor pullbacks from current level are attractive.

Long-Term Holding Thesis

Beneficiary of rising healthcare demand and brand equity in chronic segments.

Strong export pipeline, particularly in US and emerging markets.

Focused R&D and regulatory credibility offer structural growth levers.

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