MOSL: ALKEM LABORATORIES (Buy)-DF outshines for the quarter; US to follow suit shortly
- Alkem Lab (ALKEM) delivered a strong beat on expectations in its 1QFY22 performance, led by superior execution in the Domestic Formulations (DF) segment and International (ex-US) segment. While the US business witnessed higher price erosion in 1QFY22, upcoming niche launches would offset this and drive double-digit growth in the US.
- We raise our EPS estimate by 4%/2% for FY22/FY23, factoring in a) the at-risk launch of g-Duexis, b) biosimilar launches in India, c) the higher off-take of products in the VMN category, and d) increasing marketing and promotional spend with the easing of the COVID situation. We continue to value ALKEM at 23x 12M forward earnings to arrive at Target Price of INR4,030. We remain positive on ALKEM on the back of a) a healthy outperformance in DF in the Acute and Chronic therapies, supplemented by a leadership position in trade generics and new introductions (including in biosimilars) and b) a revival in US sales growth. Reiterate Buy.
Alkem Laboratories Limited is a pharmaceutical company. The Company is engaged in the development, manufacture and sale of pharmaceutical and neutraceutical products. The Company operates through two segments: pharmaceutical and investing. The Company produces generics, generic drugs, active pharmaceutical ingredients (APIs) and neutraceuticals, which it markets in India and approximately 50 countries internationally, primarily the United States. The Company offers various products, such as CLAVAM 375, CLAVAM BID DRY SYRUP, CLAVAM INJ 300MG, FREEAIR NASAL SPRAY, PAN 40MG INJECTION (VIAL), PAN/40MG TABLETS, PROWEL DRY SYRUP (30ML), TAXCLAV 100 DT TABLETS, SATROGYL O DRY SYRUP, XONE/500MG VAIL, MEROSURE KIT 500, MEROSURE 500 MG and ZADONASE, among others. The Company has approximately 16 manufacturing facilities, of which 14 manufacturing facilities are at geographically diversified locations in India and two in the United States.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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