Alkem Laboratories (ALKEM) Q1 25/26 earnings summary

Executive summary

• Q1 FY26 revenue from operations reached ₹33,711 million, up 11.2% year-over-year, with strong growth in both domestic and international markets.

• EBITDA increased 21.4% year-over-year to ₹7,391 million, with margin expansion to 21.9%.

• Net profit after minority interest rose 21.8% year-over-year to ₹6,643 million, with PAT margin improving to 19.7%.

• Outperformed the Indian Pharmaceutical Market (IPM) by 120 basis points, registering 9.7% YoY growth vs. IPM's 8.5%.

• Board approved transfer of Generic Business Undertaking to a wholly owned subsidiary, disclosed as discontinued operations.

Financial highlights

• Gross profit margin improved to 65.3% from 64.5% year-over-year.

• EBITDA margin rose to 21.9% from 20.1% year-over-year.

• PAT margin increased to 19.7% from 18.0% year-over-year.

• EPS grew 21.8% year-over-year to ₹55.6.

• R&D expenses for the quarter were ₹1,184 million, or 3.5% of revenue.

Outlook and guidance

• Management maintains FY26 guidance, citing a strong start but preferring to wait for more quarters before revising upward.

• R&D spend guidance remains at 4.5%-5% of revenue for the year, with higher expenses expected in later quarters.

• Gross margin guidance maintained at 64% for the year, with Q1 and Q2 typically stronger due to business mix.

• EBITDA margin expected to improve by about 1% annually, targeting mid-20s over the next few years, with temporary drag from new business investments.

• Business Transfer Agreement for the Generic Business expected to complete by October 1, 2025.