ALKEM - Investment Analysis

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

Investment Rating: 4.1

📊 Fundamental Analysis Summary

Alkem Laboratories (ALKEM) is a fundamentally strong large-cap pharma stock with consistent profitability, low debt, and solid capital efficiency. While the PEG ratio is slightly elevated, the company’s ROE/ROCE and earnings base justify a premium valuation. It’s a solid candidate for long-term holding, especially for investors seeking stability and moderate growth.

Metric Value Interpretation

P/E Ratio 28.0 Below industry average — relatively undervalued

PEG Ratio 3.02 Slightly high — growth priced in, but not excessive

ROE / ROCE 19.4% / 20.4% Excellent — strong capital efficiency and shareholder returns

Dividend Yield 0.89% Modest — adds passive income, but not a dividend play

Debt-to-Equity 0.12 Low leverage — financially sound

EPS ₹181 Strong earnings — supports valuation

PAT Growth (QoQ) +0.99% Flat — stable earnings, not accelerating

Book Value ₹1,002 Price-to-book ~5.1× — premium justified by ROE

RSI / MACD 63.4 / +37.9 RSI nearing overbought; MACD strong — short-term momentum

DMA 50 / 200 ₹4,948 / ₹5,076 Price near 200-DMA — consolidation zone

52W Price Range ₹4,492 – ₹6,440 Currently near lower end — attractive for accumulation

FII/DII Change -0.29% / +2.38% DII accumulation — strong institutional confidence

📉 Ideal Entry Price Zone

Given technical and valuation factors

Entry Zone: ₹4,850 – ₹5,000

Near 50-DMA and 200-DMA — strong support levels.

RSI suggests caution for aggressive entry; wait for mild pullback if possible.

🧭 Exit Strategy & Holding Period

Holding Period

5+ years — ideal for compounding returns through earnings and capital efficiency.

Exit Strategy

Consider partial exit if PEG rises above 4.0 or ROE drops below 15%.

Reassess if price exceeds ₹6,400 without corresponding EPS growth or PAT momentum.

Key Metrics to Monitor

ROCE consistently above 18%

PEG trending below 2.5

PAT growth > 10% YoY

Dividend payout improving over time

🧠 Final Thoughts

Alkem is a high-quality pharma stock with strong fundamentals and low financial risk. It’s well-suited for long-term investors seeking stability, moderate growth, and sector exposure. While not a deep value play, its consistent performance and institutional interest make it a reliable compounder.

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