Alkem Laboratories (ALKEM) Q3 24/25 earnings summary

Executive summary

• Focus on higher-margin offerings, cost-saving strategies, and expansion of flagship brands led to improved EBITDA margins and profitability in Q3 and nine-month FY25, with strong domestic growth offsetting international headwinds.

• Two acquisitions announced: Adroid (dermato-cosmetology) for INR 140 crores and Bombay Ortho (orthopedic implants) for INR 147 crores.

• Standalone and consolidated unaudited financial results for Q3 and nine months ended December 31, 2024, were reviewed and approved, with auditors issuing unmodified review reports.

• The transfer of the Generic Business Undertaking to a wholly owned subsidiary was approved and disclosed as discontinued operations in standalone results, with no impact on consolidated results.

• Outperformed Indian Pharmaceutical Market in several therapies, with strong domestic growth.

Financial highlights

• Q3 FY25 consolidated revenue: INR 33,743 million, up 1.5% YoY; nine-month revenue: INR 98,208 million, up 0.9% YoY.

• Q3 EBITDA: INR 7,594 million (22.5% margin), up 7.3% YoY; nine-month EBITDA: INR 21,209 million (21.6% margin), up 15% YoY.

• Q3 net profit: INR 6,258 million, up 5.2% YoY; nine-month net profit: INR 18,596 million, up 23.8% YoY.

• Q3 gross profit: INR 21,700 million, gross margin at 64.3%.

• Interim dividend of ₹37 per equity share declared for FY25.

Outlook and guidance

• FY25 EBITDA margin guidance maintained at 19%, with Q4 expected to be seasonally weaker due to higher R&D and filing expenses.

• Domestic business expected to grow in line with the Indian pharma market at around 7% for FY25, with potential to surpass market growth in future years.

• R&D spend projected at 4.5%-5% of sales; Q3 R&D expenses at 3.9% of revenue.

• Healthy balance sheet with net cash of ₹47.0 billion as of Dec 31, 2024.