Broker’s Call: Alkem Laboratories (Buy)

Alkem Laboratories has established itself as a leader in acute therapies, bolstered by well-known brands and a robust prescriber franchise. The company's increasing emphasis on chronic and specialty therapies aims to enhance domestic growth quality and consistency, while minimizing seasonality. Investments are being made across various sectors, including anti-diabetes, cardiac, and CNS, with the introduction of semaglutide further strengthening Alkem's diabetes portfolio and offering participation in India's largest pharmaceutical market. The US segment has reached a stabilization point after a prolonged period of generic price erosion.

The upcoming launch of gJynarque (Tolvaptan) is anticipated to be a significant growth driver. Alkem has also ventured into medical devices in orthopaedics and cardiovascular sectors through minor domestic acquisitions. Additionally, the proposed acquisition of Swiss-based Occlutech further expands Alkem's portfolio. Enzene BioSciences, the company's new biologics CDMO platform, is currently a loss-making venture but is expected to become profitable within the next four to eight quarters and could potentially become a valuable medium-term growth engine.

Currently, Alkem is trading at a price of 32.3x FY27E and 25.0x FY28E core EPS, adjusted for cash per share. With these factors in mind, the analyst initiates coverage with a BUY rating and sets a target price of ₹6,533, which represents 26.5x FY29E core earnings plus cash per share.