Explore Alkem Laboratories Ltd a pharmaceutical company through comprehensive fundamental, technical analysis and ratio covering key aspects such as profitability, liquidity, price action, and more. Gain insights into this pharmaceutical giant’s financial health and potential investment opportunities.
Alkem Laboratories Limited, an Indian-based pharmaceutical company, operates globally within the pharmaceutical industry. The company is primarily focused on the development, manufacturing, and distribution of pharmaceutical and nutraceutical products. Alkem’s product offerings span various therapeutic areas including Anti-Infective, Dermatology, Diabetology, Cardiology, Gastroenterology, Osteoporosis, Rheumatology, Central Nervous System (CNS), Oncology, Urology, Gynaecology, and Vitamins, Minerals, and Nutrition. Its product range comprises Rx Products, Alkem Generics, and OTC Products. Notable brands within its portfolio include Clavam, Pan, Pan-D, Taxim-O, A To Z NS, Xone, Taxim, Gemcal, Pipzo, and Ondem. Operating through its Pharmaceuticals segment, Alkem operates approximately 21 manufacturing facilities across India and the United States. With a portfolio boasting around 800 brands, the company’s presence extends across 40 countries.
Table of Contents
About Alkem Laboratories Ltd
Alkem Laboratories Limited, a multinational pharmaceutical corporation headquartered in Mumbai, India, specializes in the production and distribution of pharmaceutical generics, formulations, and nutraceuticals both within India and worldwide
Alkem set up its research and development facility for Abbreviated New Drug Application (ANDA) development at Taloja in 2003. In 2006 anti-infective drug Taxim of Alkem became the first anti-infective drug in the Indian pharmaceutical industry to cross 1,000 million in terms of domestic sales in India. In 2014 Clavam another drug from Alkem crossed 2,000 million mark in terms of domestic sales in India.
In 2007 the company filed its first ANDA for drug Amlodipine which was approved in 2009. Alkem has developed a portfolio of 705 branded generic drugs, with 13 of the brands featured among the top 300 brands in India for the fiscal year 2015 and a portfolio of 705 brands in India in the six months ended 30 September 2015. Alkem have 21 manufacturing facilities, 19 in India and 2 in US. 5 of the facilities are US Food and Drug Administration (FDA), Therapeutic Goods Administration(TGA), UK Medicines and Healthcare products Regulatory Agency(MHRA) approved.
Subsidiaries of Alkem Laboratories Ltd
No. | Name of the subsideries | Percentage Shareholding |
1 | Pharmacor Pty Limited | 100.0% |
2 | Cachet Pharmaceuticals Private Limited | 58.8% |
3 | Ascend Laboratories SpA | 100.0% |
4 | Enzene Biosciences Limited | 100.0% |
5 | Alkem Pharma GmbH | 100.0% |
6 | Indchemie Health Specialities Private Limited | 51.0% |
7 | The PharmaNetwork LLP | 100.0% |
8 | Alkem Laboratories Korea, Inc | 100.0% |
9 | Ascend Laboratories Sdn Bhd | 100.0% |
10 | S & B Holdings B.V. | 100.0% |
11 | Alkem Laboratories (NIG) Limited | 100.0% |
12 | Pharmacor Limited | 100.0% |
13 | Alkem Laboratories Corporation | 100.0% |
14 | S & B Pharma Inc. | 100.0% |
15 | Alkem Laboratories (Pty) Limited | 100.0% |
16 | ThePharmaNetwork LLC | 100.0% |
17 | Ascend Laboratories LLC | 100.0% |
18 | Ascend Laboratories (UK) Limited | 100.0% |
19 | Alkem Foundation | 100.0% |
20 | Ascend Laboratories Limited | 100.0% |
21 | Pharma Network SpA | 100.0% |
Share Holding Pattern of Alkem Laboratories Ltd
These figures represent significant actions taken by a company that directly influence shareholder value. They signify material changes within the company and have an impact on its stakeholders:
- Promoter Shareholding: 56.74%
- FII (Foreign Institutional Investor) Shareholding: 9.11%
- DII (Domestic Institutional Investor) Shareholding: 11.92%
- Public Shareholding: 18.51%
- Others Shareholding: 3.7%
Alkem Laboratories Ltd’s financial health and performance can be effectively assessed through a comprehensive fundamental analysis of various ratios spanning profitability, liquidity, solvency, efficiency, valuation, and growth. Let’s delve into each aspect to gain a deeper understanding of the company’s trajectory over the past four years.
Fundamental Analysis of Alkem Laboratories Ltd | ||||
Ratio | March 2023 | March 2022 | March 2021 | March 2020 |
Profitability Ratio |
| |||
Gross Profit Margin | 57.70% | 60.69% | 58.21% | 59.02% |
Net Profit Margin | 12.52 | 17.45 | 23.34 | 18.93 |
Return on Equity (ROE) | 12.13 | 17.62 | 22.09 | 20.13 |
Liquidity Ratio |
| |||
Current Ratio | 2.22 | 1.66 | 1.94 | 1.64 |
Quick Ratio (Acid-Test Ratio) | 1.66 | 1.18 | 1.42 | 1.22 |
Solvency Ratio |
| |||
Debt to Equity Ratio | 0.154 | 0.299 | 0.234 | 0.256 |
Interest Coverage Ratio | 12.94 | 36.22 | 32.26 | 20.36 |
Efficient Ratio |
| |||
Inventory Turnover Ratio | 1.75 | 1.57 | 1.74 | 2.06 |
Account Receivable Turnover Ratio | 5.78 | 5.64 | 5.08 | 4.72 |
Valuation Ratio |
| |||
Price to earning Ratio (P/E) | 41.26 | 26.31 | 20.89 | 24.67 |
Price to Book Ratio (P/B) | 4.49 | 5.00 | 4.47 | 4.50 |
Growth Ratio |
| |||
Earning per Share (EPS) Growth | 94.88 | 128.90 | 140.93 | 105.75 |
Revenue Growth | 9,320.84 | 9,029.70 | 7,409.69 | 6,773.06 |
Profitability Ratio
Gross Profit Margin:
From fundamental analysis, Alkem Laboratories Ltd‘s gross profit margin has exhibited a slight decline from 60.69% in March 2022 to 57.70% in March 2023. This decrease may indicate potential challenges in maintaining profitability after accounting for the cost of goods sold.
Net Profit Margin:
The net profit margin, reflecting the company’s bottom-line profitability, has experienced a noticeable downward trend, declining from 23.34% in March 2021 to 12.52% in March 2023. This significant drop suggests a decrease in profitability relative to revenue, potentially signalling operational inefficiencies or increased expenses.
Return on Equity (ROE):
Alkem Laboratories Ltd’s return on equity has followed a similar trajectory, decreasing from 22.09% in March 2021 to 12.13% in March 2023. This decline indicates a reduction in the company’s ability to generate profits from shareholders’ equity, raising concerns about its overall financial performance.
Liquidity Ratio
Current Ratio:
The current ratio, a measure of the company’s short-term liquidity and ability to meet immediate obligations, has shown improvement over the years, increasing from 1.64 in March 2020 to 2.22 in March 2023. This upward trend suggests enhanced liquidity and financial stability.
Quick Ratio (Acid-Test Ratio):
Similarly, the quick ratio has demonstrated improvement, rising from 1.22 in March 2020 to 1.66 in March 2023. This indicates an enhanced ability to cover immediate liabilities with highly liquid assets, reflecting positively on the company’s financial health.
Solvency Ratio
Debt to Equity Ratio:
Alkem Laboratories Ltd has effectively managed its debt levels, as evidenced by a declining debt-to-equity ratio over the years, decreasing from 0.256 in March 2020 to 0.154 in March 2023. This reduction indicates a lower reliance on debt financing relative to equity, contributing to improved solvency and financial stability.
Interest Coverage Ratio:
The company’s interest coverage ratio, measuring its ability to meet interest obligations, has shown a positive trend, increasing from 20.36 in March 2020 to 12.94 in March 2023. This improvement suggests strengthened financial health and reduced financial risk associated with debt servicing.
Efficiency Ratio
Inventory Turnover Ratio:
Alkem Laboratories Ltd’s inventory turnover ratio has exhibited fluctuations, indicating potential challenges in managing inventory efficiently. While the ratio stood at 2.06 in March 2020, it decreased to 1.75 in March 2023, suggesting a longer inventory turnover period.
Account Receivable Turnover Ratio:
Conversely, the account receivable turnover ratio has remained relatively stable over the years, indicating consistent collection of receivables. This stability reflects positively on the company’s efficiency in managing accounts receivable and cash flow.
Valuation Ratio
Price to Earning Ratio (P/E):
The price-to-earnings ratio has witnessed an increasing trend, rising from 20.89 in March 2021 to 41.26 in March 2023. This suggests a higher valuation of Alkem Laboratories Ltd’s stock relative to its earnings, potentially indicating investor optimism or market expectations of future growth.
Price to Book Ratio (P/B):
Similarly, the price-to-book ratio has shown fluctuations but remained relatively stable, ranging from 4.47 in March 2021 to 5.00 in March 2022. This ratio signifies the market’s valuation of the company relative to its book value, with lower ratios generally indicating undervaluation.
Growth Ratio
Earning per Share (EPS) Growth:
Alkem Laboratories Ltd has demonstrated significant growth in earnings per share over the years, with the EPS growth ranging from 94.88% in March 2023 to 140.93% in March 2021. This robust growth indicates the company’s ability to generate increasing profits for shareholders.
Revenue Growth:
The company has experienced steady revenue growth, with revenue increasing from 6,773.06 in March 2020 to 9,320.84 in March 2023. This consistent growth trajectory underscores Alkem Laboratories Ltd’s ability to expand its top-line performance and capture market opportunities.
In conclusion, Alkem Laboratories Ltd’s fundamental analysis reveals strengths in liquidity, solvency, and revenue growth, alongside challenges in profitability and efficiency. While the company has shown improvements in certain areas, such as liquidity and debt management, there are areas for further enhancement, particularly in profitability margins and inventory turnover efficiency. Investors should consider these factors comprehensively, along with qualitative aspects, when making investment decisions regarding Alkem Laboratories Ltd.
Technical analysis of Alkem Laboratories Ltd
Technical analysis of Alkem Laboratories Ltd involves evaluating price movements and trading volumes to forecast future price movements. Technical analysis depends on charts and statistical indicators. analysts use various techniques, such as trend analysis, chart patterns, and technical indicators like moving averages or relative strength index (RSI), to identify potential buying or selling opportunities for Alkem Laboratories Ltd. The main goal of technical analysis of Alkem Laboratories Ltd share price is to predict future price movements based on historical data and market psychology, helping investors make informed decisions about when to enter or exit trades. So, bellow we are explaining Various techniques as of 26th April 2024 for technical analysis of Alkem Laboratories Ltd.
Price action
Price action and price level of Alkem Laboratories Ltd (As of 26th April) | |||
Price action | Daily Timeframe | Weekly Timeframe | Monthly Timeframe |
Candlestick | Morning Star on 19th April | Bullish Marubozu on 22nd April | Doji |
Chart Pattern | Falling Wedge | Falling Wedge | Bullish Flag |
Price Support Level | 4600 | 4600 | 4600 |
Price Level | 4910 is Current price | 52 weeks High 5,520.00 | 52 weeks low 3,186.30 |
On The basis of price action and price levels of Alkem Laboratories Ltd, as of April 26th, are indicative of various trends and candlestick patterns across different timeframes, including the daily, weekly, and monthly.
On the daily candlestick, Alkem Laboratories Ltd exhibited a Morning Star candlestick pattern on April 19th. The current price of this stock is 4910 and according to the daily candle, a strong breakout has been formed on 25th April 2024. The Morning Star candlestick pattern consists of three candles: a long bearish candle, followed by a small-bodied candle (or doji) indicating indecision, and finally a long bullish candle. This pattern suggests a potential reversal of a downtrend, with bullish momentum gaining strength.
Additionally, a Falling Wedge candlestick chart pattern is observed on the daily timeframe from January 2024. A Falling Wedge is characterized by declining price action contained within converging trendlines. This candlestick pattern typically signals a bullish reversal, with prices likely to break out to the upside and we can clearly see the breakout on the daily chart.
The price support level on the daily candlestick is at 4600 which is much more above of 52 weeks low(3186.30). This level serves as a critical support for the stock’s price, indicating a significant area where buying pressure may emerge, preventing further decline.
On the weekly candlestick, a Bullish Marubozu candlestick pattern has formed on April 22nd within price range of 4632-4911. A Bullish Marubozu candlestick consists of a long green candle with no shadows, indicating strong bullish momentum throughout the entire trading session. This pattern suggests strong buying interest and a potential continuation of the uptrend.
Similar to the daily candlestick, a Falling Wedge pattern is observed on the weekly chart as well. This builds up the potential bullish bias by the Bullish Marubozu candlestick pattern.
The price support level remains consistent at 4600 on the weekly timeframe, further emphasizing its significance as a key level to monitor for potential price reversals or bounces.
On the monthly candlestick, a Doji candlestick pattern is observed and the range of this candlestick is 4567-5090. A Doji forms when the opening and closing prices are virtually equal, resulting in a small-bodied candlestick with long upper and lower shadows. This pattern signifies indecision in the market and often precedes significant price movements.
Opposite to the daily and weekly timeframes, a Bullish Flag pattern is identified on the monthly candlestick chart. A Bullish Flag is a continuation pattern characterized by a sharp upward price movement (flagpole) followed by a consolidation phase (flag), typically sloping downwards. This candlestick pattern suggests a temporary pause in the uptrend before resuming higher.
Once again, the price support level remains consistent at 4600 on the monthly timeframe, supporting its importance across different timeframes.
By technical analysis of Alkem Laboratories Ltd price action and price levels, analysed on various timeframes, indicate a mixed outlook with bullish signals observed on the daily and weekly candlestick charts, while the monthly chart presents a more neutral stance. The identification of consistent support at 4600 underscores its significance as a key level for traders and investors to monitor. Additionally, the presence of bullish candlestick chart patterns such as the Falling Wedge and Bullish Marubozu suggests potential upside momentum in the near term. However, traders should exercise caution and consider other technical and fundamental factors before making trading decisions.
Indicators Use for Technical Analysis
Moving Average (MA):
Moving Average price level of Alkem Laboratories Ltd (As of 26th April | ||
Moving Average | Daily Timeframe | Weekly Timeframe |
200 Simple Moving Average (SMA) | 4412 | 3433 |
200 Exponential Moving Average (EMA) | 4497 | 3487 |
On the daily timeframe, the 200 Simple Moving Average (SMA) stands at 4412 above 52 weeks high. It indicates the average closing price of Alkem Laboratories Ltd over the past 200 trading days. 200 Exponential Moving Average (EMA) on the daily is calculated to 4497 and acting as dynamic support levels. In broader perspective both moving averages are very close to each other and slight above of 52 weeks low.
Relative Strength Index (RSI):
Relative Strength Index (RSI) of Alkem Laboratories Ltd (As of 26th April) | |||
| Daily | Weekly | Monthly |
Relative Strength Index (RSI) | 53.63 | 54.6 | 67 |
The Relative Strength Index (RSI) of Alkem Laboratories Ltd, as of April 26th, reflects the stock’s momentum and potential levels of overbought or oversold conditions across different timeframes. At 53.63, the daily RSI suggesting potential buying opportunities. With a reading the weekly and monthly RSI suggests same as daily RSI with balanced momentum.
Data Analysis
By analysing the open interest data, traders or investors can determine market sentiment and participant psychology for the future. In Alkem Laboratories Ltd., sufficient put writings have been done at 4500, 4600, and 4700 strike by put writers. The large number of put writings indicates good support at 4500 in a larger timeframe. On the other hand, comparatively less open interest has been created at the 5000-strike price. The maximum number of call writers is 5000, showing good resistance. But for the time being, call writers may cover their short, which technical analysis is indicating.
Conclusion
In conclusion, the combined analysis of Alkem Laboratories Ltd using both technical and fundamental indicators suggests that this stock presents a convincing investment opportunity. Fundamental analysis highlights the company’s strong liquidity, improving solvency, and consistent revenue growth, despite challenges in profitability. Meanwhile, technical analysis indicates bullish signals such as favorable candlestick patterns and support levels, suggesting potential upward momentum in the stock price.
Considering these factors, now this is the perfect time to invest in Alkem Laboratories Ltd. Investors may benefit from the company’s solid fundamentals and the positive bullish momentum indicated by technical analysis. However, as with any investment and trading, thorough research and careful consideration of risk factors are essential. Overall, Alkem Laboratories Ltd stands out as a promising option for investors in longer period, seeking growth potential in the pharmaceutical sector.
FAQs
- What does Alkem Laboratories Ltd do?
Alkem Laboratories Ltd is a multinational pharmaceutical corporation headquartered in Mumbai, India. It specializes in the production and distribution of pharmaceutical generics, formulations, and nutraceuticals both within India and worldwide.
- Where is Alkem Laboratories Ltd based?
The headquarters of Alkem Laboratories Ltd is located in Mumbai, India.
- What is the product range of Alkem Laboratories Ltd?
Alkem Laboratories Ltd offers a wide range of pharmaceutical and nutraceutical products spanning various therapeutic areas including Anti-Infective, Dermatology, Diabetology, Cardiology, Gastroenterology, Oncology, and more. Its product range includes Rx Products, Alkem Generics, and OTC Products.
- How many manufacturing facilities does Alkem Laboratories Ltd operate?
Alkem Laboratories Ltd operates approximately 21 manufacturing facilities across India and the United States.
- In which countries does Alkem Laboratories Ltd operate?
Alkem Laboratories Ltd operates in around 40 countries globally, extending its presence beyond India and the United States.
- What are the notable brands under Alkem Laboratories Ltd’s portfolio?
Some notable brands within Alkem Laboratories Ltd’s portfolio include Clavam, Pan, Pan-D, Taxim-O, A To Z NS, Xone, Taxim, Gemcal, Pipzo, and Ondem.
- What subsidiaries does Alkem Laboratories Ltd have?
Alkem Laboratories Ltd has several subsidiaries, including Pharmacor Pty Limited, Cachet Pharmaceuticals Private Limited, Ascend Laboratories SpA, Enzene Biosciences Limited, and more.
- What is the shareholding pattern of Alkem Laboratories Ltd?
The shareholding pattern of Alkem Laboratories Ltd includes Promoter Shareholding, FII (Foreign Institutional Investor) Shareholding, DII (Domestic Institutional Investor) Shareholding, Public Shareholding, and Others Shareholding.
- How can I invest in Alkem Laboratories Ltd?
Investors can invest in Alkem Laboratories Ltd through various stock exchanges where it is listed, such as the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India.
- Is now a good time to invest in Alkem Laboratories Ltd?
The decision to invest in Alkem Laboratories Ltd depends on individual financial goals, risk tolerance, and market conditions. Conducting thorough research, including both fundamental and technical analysis, can help investors make informed decisions.
