Alkem Laboratories (ALKEM) Q2 24/25 earnings summary

Executive summary

• Strategic initiatives and cost control improved profitability, with EBITDA margin rising to 21.1% in H1FY25 and net profit up 36% year-over-year.

• H1FY25 revenue from operations grew 0.6% year-over-year to ₹64,465 million; India sales up 6.0% while international sales declined 8.8%.

• Domestic business outperformed in several therapies, while US business saw double-digit sales decline and supply chain challenges.

• Q2FY25 revenue was ₹34,147 million, with net profit at ₹7,019.6 million, up 11% year-over-year.

• The Board approved a final dividend of ₹5 per share, with Indore facility identified for divestment.

Financial highlights

• H1FY25 EBITDA was ₹13,615 million, up 19.9% year-over-year; Q2FY25 EBITDA was ₹7,528 million, up 0.8% year-over-year.

• H1FY25 gross profit margin rose to 64.6%; Q2FY25 gross margin at 64.7%.

• H1FY25 PBT before exceptionals up 32.2% year-over-year; Q2FY25 PBT up 10.6% year-over-year.

• EPS for H1FY25 at ₹103.2 (up 36%); Q2FY25 EPS at ₹57.6 (up 11%).

• Net cash position of ₹42.2 billion as of September 30, 2024.

Outlook and guidance

• Overall top-line growth for FY25 expected to be mid-single-digit due to US business challenges.

• EBITDA margin guidance raised to 18.5%-19%, a 100 bps improvement.

• Domestic growth guidance maintained at 8%-9% annually, with Q4 expected to be strong.

• US business expected to see flattish to mid-single-digit erosion for the year, with H2 performance improving.

• The company continues to optimize its manufacturing footprint, including the planned divestment of the Indore facility.