Alkem Laboratories Q1 FY27 Results Analysis: PAT Plunges 21.7%, Margin Compresses 140 bps

Alkem Laboratories Ltd's Q1 FY27 numbers came in soft, with revenue of Rs. 3,740.20 Cr (+10.90% YoY) and PAT growth of -21.70% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Revenue grew 10.9% YoY but EBITDA margin compressed 140 bps and PAT declined 21.7% due to tax rate normalization and cost pressures. Management missed guidance on US revenue, margin improvement, and tax rate, while domestic outperformance and non-US international growth were bright spots. Post-quarter events include Daman OAI classification and Occlutech acquisition, adding uncertainty.

Key Investment Insights

Key Positives

• Domestic revenue grew 10.3% YoY outperforming IPM by 100 bps.
• Non-US international revenue grew 34.5% YoY, contributing 12.9% of sales.
• EBITDA margin of 20.5% was within the guided 20-21% band.
• Net cash improved to Rs.5,764 Cr from Rs.5,474 Cr QoQ.
• Gross margin expanded 2.6 ppt YoY to 67.9%.

Risk Factors

• US revenue growth of 6.5% INR implies USD decline, missing high single-digit USD guidance.
• EBITDA margin compressed 140 bps YoY due to employee cost growth of 16.7% and other expenses growth of 25.6%.
• Effective tax rate surged to 32.4% from 13.3% YoY, causing PAT decline of 21.7%.
• Daman facility received OAI classification post-quarter, overhang on US business.
• CEO resignation effective 30-Jun-2026 with no successor announced.