Alkem Laboratories shares drop 5% after Q4 results. Should you buy, sell, or hold?

Synopsis

Alkem Laboratories shares fell 5% after Q4FY25 results showed a modest 4.2% profit rise to Rs 306 crore and margin contraction to 12.4%. While Jefferies downgraded the target to Rs 4,460 citing weak margins, Nomura maintained a ‘Buy’ with a Rs 5,430 target. The company expects high single-digit revenue growth in FY26 and rising tax rates in FY27.

Alkem Laboratories shares declined 5% to Rs 5,025 in Friday’s intraday trade on the BSE after the company reported a net profit of Rs 306 crore for Q4FY25, a 4.2% increase from Rs 294 crore in the same quarter last year.

Revenue from operations rose 7.1% year-on-year to Rs 3,143.8 crore during the quarter. However, the EBITDA margin narrowed to 12.4%, down from 13.7% in Q4FY24.

The Mumbai-based pharma firm declared a final dividend of Rs 8 per equity share for FY25, subject to shareholder approval. The record date for dividend eligibility is August 8.

Domestic sales grew 8.1% to Rs 2,135.5 crore, while international sales rose 7.2% to Rs 974.7 crore in the fourth quarter.

Commenting on the performance, Alkem Labs CEO Vikas Gupta said, “We ended the year on a good note, with healthy growth in our India business during Q4 and improved profitability and margins for the full year. Our domestic business continues to gain momentum, reinforcing our confidence in its long-term growth trajectory. This performance is driven by strong execution and targeted initiatives across our domestic operations.”

He added, “In our international businesses—excluding the Americas—we are seeing good traction, with several key markets making significant contributions to our growth. As we move forward, we remain focused on strategic growth opportunities and operational excellence to drive sustainable returns.”

Should you buy, sell, or hold Alkem Laboratories stock? Here’s what brokerages say:

Jefferies

Jefferies has maintained an ‘Underperform’ rating on Alkem Labs and cut its target price to Rs 4,460.

The brokerage noted that the company’s Q4 performance missed estimates due to lower margins. After 18 months of consistent margin improvement, Alkem is now shifting focus toward accelerating growth. The company has guided for high single-digit revenue growth in FY26 and expects double-digit growth in FY27, primarily led by the Indian market.

Nomura

Nomura has maintained a ‘Buy’ rating on Alkem Labs with a target price of Rs 5,430.

The brokerage noted that Q4 sales were in line with expectations, while EBITDA and PAT came in 2% and 6% below estimates, respectively. The FY26 guidance was described as mixed. The company expects its effective tax rate (ETR) to rise to 35–37% in FY27E, compared to the earlier estimate of 20%. Nomura highlighted that while the higher ETR will negatively impact reported earnings, it will not affect cash flows.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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