Alkem Laboratories Limited — Q3 FY24
Alkem reported a strong Q3 FY24 with 9% YoY revenue growth and 160bps EBITDA margin expansion to 21.3%, driven by lower API costs and favorable mix shift toward higher-margin RO...
bullish
high
✓ Verified against BSE filing
Claim Ledger
Did management answer the analysts?
Every material analyst question, graded on whether management actually answered it — with the verbatim exchange and quantitative claims checked against filed numbers.
63%Questions answered1Evaded / deflected12Questions auditedContradictedNumbers vs filing
Partial answer
High priority
Why is Alkem underperforming in anti-infective and pain segments vs IPM?
Asked by Rashmi Sancheti, Dolat Capital
Management cited seasonality and market factors but did not provide concrete plans to close the gap.
attributed to seasonalityno specific plan given
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Question
we are still lower in anti-infective and pain segment versus IPM, anti-infective and pain segment growth. So if you could give reasons for that, where we are lacking behind, and what are your plans to overcome it?
Vikas Gupta, CEO
the lesser growth in anti-infective is largely a function of seasonality in the areas of strength... we have the largest play in Amoxiclav as a market... that's what is putting our entire anti-infective portfolio down.
Answered
Medium priority
What is the current chronic contribution as a percentage?
Asked by Rashmi Sancheti, Dolat Capital
Management provided a specific percentage (17%) for chronic contribution.
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Question
Your chronic contribution now on nine months currently stands at how much?
Vikas Gupta, CEO
the contributions have it still stands at around 17% within the range of, yeah, around 17%, I would say.
Partial answer
High priority
What drives international (ex-US) growth and is it sustainable?
Asked by Rashmi Sancheti, Dolat Capital
Management identified regions but did not quantify drivers like volume or new launches.
no breakdown of volume vs new launches
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Question
what are the factors that are actually contributing to this growth? Is it volume expansion or new launches or adding new geographies? ... whether we will see this growth getting normalized or there is still scope to see this kind of growth ahead?
Vikas Gupta, CEO
our international growth, non-U.S. growth, the significant uptake has come from a few markets in Latin and Europe... these are sustainable. You would see even in 2025, 2026 because as an organization, we are focusing now on these markets much more than before.
Partial answer
High priority
What drove the reduction in other expenses and is it sustainable?
Asked by Charu Aggarwal, Bank of America
Management linked to gross margin improvement but did not detail specific cost reduction measures.
attributed to gross margin, not specific cost items
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Question
this quarter, we have seen significant reduction in the other expenses. So, wanting to understand what drove this reduction, and can we see this as a sustainable return?
Vikas Gupta, CEO
this is a function of the gross margin... improvement in gross margin was on account of lower API prices... focus on ROWs, which is a higher gross margin market as compared to the U.S., has also contributed to increase in gross margin.
Answered
High priority
What does improved profitability mean and what is sustainable margin?
Asked by Chirag Joshi, DSP
Management gave a specific sustainable margin target (17%) and indicated potential improvement.
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Question
when you say you want to improve profitability, what exactly do you mean? ... how should we think about because the business is obviously seasonal. So question was more on a sustainable basis, where should we think margins are?
Vikas Gupta, CEO
we expect to close the year at around 17% of EBITDA margin... at 17%, I believe that should be sustainable. Going forward, we should look at improving it further.
Evasive
Medium priority
Any thoughts on deploying strong cash balance?
Asked by Chirag Joshi, DSP
Management acknowledged cash but gave no concrete deployment plans.
no specific plansno timeline
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Question
we are sitting on a very strong cash balance... Any incremental thoughts on how you're thinking about deploying this cash?
Vikas Gupta, CEO
we are looking at various opportunities of deploying balance sheet cash, whether it means acquisition... right now, there is nothing that's available to us... which is at the right valuation.
Partial answer
Medium priority
Why did other expenses drop from INR 811cr to INR 740cr?
Asked by Kunal Dhamesha, Macquarie
Management gave reasons but did not quantify sustainability of the lower level.
attributed to seasonality and mix, not specific cost cuts
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Question
the INR 811 crore other expense in quarter two has gone down to INR 740 crore in this quarter. So any particular reason for this? Is this more sustainable level from here on?
Vikas Gupta, CEO
quarter two, because of the seasonality, is one of the strongest quarters... because of higher sales, there are higher marketing expenses... there is an element of forex which is around 0.2%... we have reduced our distribution expense in terms of our air trade.
Partial answer
High priority
Why underperformance in respiratory and cardiac, and biosimilar update?
Asked by Yash Tanna, iThought PMS
Management acknowledged underperformance but gave vague plans; biosimilar update was more specific.
no specific timeline for improvement
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Question
if I see respiratory and cardiac, right, there is some sort of underperformance... what are we trying to do to bridge this gap? ... regarding the biosimilars... what are our plans going forward?
Vikas Gupta, CEO
both these segments... in our portfolio are very small as on date... on respiratory... new launches... are doing pretty well... our strategy on biosimilar, we are pretty much on track... we have almost 7 products that we have already launched.
Partial answer
High priority
What is medium-term margin aspiration and chronic/acute mix?
Asked by Damayanti Kerai, HSBC
Management gave a directional view (upwards of 20%) but no specific margin target.
aspirational, no firm target
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Question
in medium term, what kind of margin aspirations you are having... next three to five years, what kind of mix you are looking between acute and chronic therapies in India?
Vikas Gupta, CEO
chronic is our topmost focus... today, we are at close to 17%, but I see upwards of 20% in the coming years... the guidance of 17% was on the sustainable basis, and we will continue to improve.
Answered
Medium priority
What is the R&D spend trajectory and gross margin difference between acute and chronic?
Asked by Madhav Marda, Fidelity
Management provided specific R&D spend range and margin differential.
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Question
over the next 2-3 years how the R&D trajectory could look like? ... how different gross margin profile is between the two?
Vikas Gupta, CEO
we may end the year around 4%, and that is what we feel we will be continuing between 4.5% for coming years... acute portfolio generally has a 10%-15% lesser margin profile as compared to the chronic portfolio.
Partial answer
High priority
Is ex-US growth sustainable or one-off tender-based?
Asked by Saion Mukherjee, Nomura
Management gave qualitative assurance but no numbers to support sustainability.
no quantitative guidanceno breakdown of tender vs branded
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Question
the concern here is that it looks unsustainable. Is it something one-off or tender-based? ... can you guide us on how should we think about this number over the next few years?
Vikas Gupta, CEO
I see no reason overall in terms of sustaining these markets that we might see a slowdown... it's not like one or two tenders have contributed to this growth... fewer or more markets like Chile, Germany, we are doing well.
Answered
Medium priority
What is NLEM exposure and impact of WPI on margins?
Asked by Gagan Thareja, ASK Investment Managers
Management provided specific NLEM exposure range and addressed margin impact.
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Question
can you give your exposure to NLEM and also parallelly indicate WPI being negative this year? Does that have any impact on gross margins going ahead into the next year?
Vikas Gupta, CEO
Our NLEM portfolio is within the range of around 28%-32%... I don't see the margins going down. At the most, what would happen is we will not be able to take the price increase.
Quantitative claims vs filed numbers
| Claim | Management said | Filing | Verdict |
|---|---|---|---|
| EBITDA margin guidance of 17% for FY24 | 17% | 21% | Understated vs filing |
Filed figures sourced from Screener.in. Claims within a small tolerance of the filing are marked “matches filing”.