Alkem Lab — Q2 FY26 earnings call

Call held 13 Nov 2025

Management summary

Alkem Laboratories reported a strong Q2 FY26, achieving an all-time high revenue of INR4001 crores, up 17.2% YoY, and a 22.3% YoY EBITDA growth to INR920.8 crores, with margins at 23%. Growth was robust across India, U.S. (28% YoY), and non-U.S. (32.4% YoY) markets, supported by new product launches. However, the company anticipates increased expenses in H2 due to new CDMO operations and the impact of GST revisions, while maintaining a full-year EBITDA margin guidance of 19.5-20%.

Highlights

  • Total revenue reached an all-time high of INR4001 crores, growing 17.2% YoY.

  • EBITDA grew 22.3% YoY to INR920.8 crores, with EBITDA margin expanding to 23%.

  • U.S. sales grew robustly by 28% YoY to INR764.9 crores, driven by new product launches like sacubitril/valsartan.

  • Non-U.S. sales demonstrated strong growth of 32.4% YoY to INR424.1 crores, with strong performance in markets like Germany and Australia.

  • Alkem became the number one company in the Acute segment in the domestic market for Q2 FY26, outperforming IPM in 6 out of 11 therapies.

Concerns

  • GST revision led to a one-time impact of INR10-12 crores in Q2 and an ongoing impact of INR50-60 crores in H2 due to loss of benefits from the Sikkim facility.

  • New business investments (Medtech, Enzene CDMO) are currently incurring operational losses, with Medtech having an EBITDA loss of INR5.5 crores in Q2.

  • Other expenses increased sequentially by almost INR200 crores, partly due to marketing expenses and the consolidation of new subsidiaries.

Key financials

  1. Revenue ₹4,001 Cr +17.2%YoY
  2. EBITDA ₹920.8 Cr +22.3%YoY
  3. EBITDA Margin 23%
  4. Net Profit (after minority interest) ₹765.1 Cr +11.1%YoY
  5. R&D Expenses ₹130.2 Cr
  6. R&D as % of Revenue 3.3%

What they filed

Q1 FY27: revenue up 10.9%, net profit down 22.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,415 3,374 3,144 3,371 4,001 +17%3,737 +11%3,603 +15%3,740 +11%
EBITDA753 759 391 739 921 +22%828 +9%517 +32%766 +4%
Net profit702 641 322 668 779 +11%653 +2%251 −22%521 −22%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹3,955 Cr Total
  • India Sales ₹2,766 Cr 69.9%
  • U.S. Sales ₹764.9 Cr 19.3%
  • Non-U.S. Sales ₹424.1 Cr 10.7%

Capital allocation

high confidence
  • M&A Bombay Ortho and Adroit Acquisition · Closed

    Acquired for trademark and technical know-how, contributing to increased intangible assets.

    Contributed to higher other expenses in Q2 FY26 as part of consolidated results.

    So we acquired 2 companies in April '25, one was Bombay Ortho and other one was Adroit. So other intangible assets also includes the trademark and the technology -- technical know-how, which we got from the company when we acquired them and we have capitalized the trademark

Guidance & targets

Revenue

  • India business growth vs. IPM Revenue · H2 FY26, FY27 · High confidence Outperform IPM by 100-150 bps (IPM growth 8-8.5%)
    I have always maintained that we will continue to outperform the market at least by 100 to 150 basis points. This growth is backed by one strong launches plus our key brands doing pretty fast. So I think this trend can continue even in H2.

    — Vikas Gupta

  • Non-U.S. growth Revenue · FY26 · Medium confidence High teens to 20%
    I foresee for the annual -- I mean, for this financial year, we should be very much there. At this point in time, maybe because of certain opportunities that you were able to get in markets, like Germany and Australia, we have got a very good first half. We are expecting that looking at even the second half projections, we should be easily upwards close to around high teens of 20% kind of growth from the non-U.S. markets.

    — Vikas Gupta

  • Enzene U.S. CDMO revenue (current run rate) Revenue · Per quarter (current average) · High confidence INR15-20 crores
    For Enzene U.S. operations, the current average is around INR15 crores to INR20 crores per quarter of revenue.

    — Vikas Gupta

  • Enzene U.S. CDMO revenue Revenue · FY26 · High confidence INR70-80 crores
    we expect to close between INR70 crores to INR80 crores of revenue from Enzene CDMO U.S. business.

    — Vikas Gupta

  • Enzene U.S. CDMO annual run rate from current capacity Revenue · In next 12 to 18 months · Medium confidence INR300 crores
    we will try and get to that number maybe at an annual run rate of INR300 crores. INR300 crores over next 12 to 18 months, that is how we'll -- but I think maybe after a quarter or two, we should be able to give you a better picture on that front.

    — Vikas Gupta

  • U.S. business growth Revenue · FY26 · Medium confidence 10-11% (low double-digit)

    Previously Mid-single-digit → 10-11% (low double-digit)

    we are hopeful that we should be closing the year close to a double-digit kind of growth. So I think it's getting close to a low double-digit kind of growth. So somewhere between 10% to 11% is what I expect. It should be close.

    — Vikas Gupta

Profitability

  • EBITDA margin Profitability · FY26 (full year) · Medium confidence 19.5% to 20%
    I see somewhere between 19.5% to 20% should be our EBITDA for the full year.

    — Vikas Gupta

  • Overall margins Profitability · Year-on-year (long-term) · Medium confidence 1% improvement
    I've always maintained that year-on-year, we should look at least a 1% improvement in our overall margins.

    — Vikas Gupta

  • Medtech business breakeven Profitability · FY28 · Low confidence Breakeven
    I think FY '28 is when we will break even. But the amount will be not very significant from Medtech in terms of opex losses.

    — Nitin Agrawal

Expenses

  • U.S. CDMO plant operational expenditure Expenses · H2 FY26 · High confidence INR50-60 crores
    in H2, we expect our U.S. CDMO plant is operational now. So we will get start getting the opex of that plant from Q3 onwards. So in Q3 and Q4, say, H2 put together, we expect at least INR50 crores to INR60 crores as an operational expenditure for per quarter.

    — Vikas Gupta

  • Impact from loss of Sikkim facility benefit due to GST Expenses · H2 FY26 · High confidence INR50-60 crores
    in H2, INR50 crores to INR60 crores for the benefit that we used to get from the Sikkim facility. So perhaps that will be another impact that will be there for us.

    — Vikas Gupta

  • R&D spend as % of revenue Expenses · FY26 (full year) · High confidence 4-5%
    we expect the R&D to be within 4% to 5% -- and I think we should get them. That has been our trend over the years. So we will catch up. That expense will catch up in H2.

    — Vikas Gupta

  • Other expenses (including Enzene and Medtech) Expenses · Per quarter (Q3 and Q4 FY26) · High confidence INR900-905 crores
    The other expense will be for quarter 3 and quarter 4 will be in the range of, say, INR900 crores, INR905 crores. So you can everything, including Enzene and Medtech, our other expenses will be around INR900 crores for quarter 3 and quarter 4.

    — Nitin Agrawal

Tax

  • Effective Tax Rate (ETR) Tax · FY27, FY28 · High confidence 35-38%
    FY '27 will be 35% to 38%, you can say, because we'll be coming out of MAT after March '26.

    — Nitin Agrawal

Market context

  • Overall growth Revenue · FY26 · High confidence Double-digit
    we gave an overall guidance of a double-digit kind of growth, assuming the market grows at around 8% to 8.5%, which looks like the plausible scenario.

    — Vikas Gupta

What to watch in Q3 FY26

Enzene U.S. CDMO operational expenditure

Q3 FY26 onwards
Current Started incurring from Q3 FY26
Target INR25-30 crores per quarter

Why it matters

To monitor the cost absorption of the newly operational CDMO plant against revenue ramp-up and its impact on overall profitability.

So in Q3 and Q4, say, H2 put together, we expect at least INR50 crores to INR60 crores as an operational expenditure for per quarter.

Risks & concerns

  • GST Revision Impact

    medium

    One-time impact of INR10-12 crores in Q2 FY26 and ongoing INR50-60 crores impact in H2 FY26 due to loss of benefits from the Sikkim facility.

    Management acknowledged

  • Penicillin G Minimum Import Price (MIP)

    medium

    Potential government imposition of MIP on Penicillin G could impact costs, but management awaits official notification.

    Analyst deflected

  • U.S. Generics Pricing Erosion

    medium

    New launches in the U.S. market, while driving growth, are subject to pricing erosion due to high competition.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
India Business Growth Sustainability Direct
I have always maintained that we will continue to outperform the market at least by 100 to 150 basis points. This growth is backed by one strong launches plus our key brands doing pretty fast. So I think this trend can continue even in H2.

Clarifies management's confidence in sustaining strong domestic growth and outperformance against the IPM in the coming quarters.

Asked by Neha

Margins Guidance and New Business Investments Direct
in H2, we expect our U.S. CDMO plant is operational now. So we will get start getting the opex of that plant from Q3 onwards. So in Q3 and Q4, say, H2 put together, we expect at least INR50 crores to INR60 crores as an operational expenditure for per quarter. So at least INR100 crores of operational expenditure that might start hitting us in H2.

Provides specific financial impact of new investments on H2 expenses and reiterates full-year EBITDA margin guidance despite these costs, indicating a potential for margin pressure in the short term.

Asked by Neha

Medtech and Adroit Sales and Spend Direct
So Medtech, we have just started. So we report I think we or we have done almost 900 knee replacements. Though, in terms of the revenue, it will be hardly INR2.5 crores. And in Adroit, I think we are maintaining our run rate of around INR15 crores for the quarter. So that's on Adroit. ... So for the quarter, Medtech opex was around INR8 crores to INR9 crores. So there is an EBITDA loss of around INR5.5 crores in Medtech. And Adroit is at a breakeven.

Details the nascent stage of the Medtech business with minimal revenue and initial losses, while Adroit is at breakeven, providing insight into the performance of new ventures.

Asked by Damayanti

Enzene CDMO Business Ramp-up and Breakeven Direct
For Enzene U.S. operations, the current average is around INR15 crores to INR20 crores per quarter of revenue. And we expect this to continue till year-end. So we expect to close between INR70 crores to INR80 crores of revenue from Enzene CDMO U.S. business. The opex expense will be around INR50 crores per quarter going forward because we just started this facility in the month of September.

Details the current revenue run rate, full-year revenue expectation, and significant quarterly opex for the newly operational Enzene U.S. CDMO plant, indicating an initial ramp-up phase with associated costs.

Asked by Damayanti

Penicillin G Minimum Import Price (MIP) Impact Evasive
So this is speculative, Bansi, at this point in time. And any hypothesis that I build on any speculation won't hold true. So we are waiting for some notification to come. As of now, we are sufficiently covered in terms of our inventories. But yes, I mean, depending on the MIP, whatever price the government will fix, only then we will be able to see whether it is going to be a cost increase or a cost decrease.

Highlights a potential regulatory risk that could impact costs, but management defers commentary until official notification, indicating uncertainty and a wait-and-watch approach.

Asked by Bansi Desai

Increase in Other Expenses Direct
So one reason, as I said, is the marketing expense. Generally, our quarter 2 marketing expenses are highest if you compare to other quarters. And if you compare with last year, it also we have now 2 new subsidiary, Bombay Ortho and Adroit, which is currently -- in this quarter, it was part of the consolidated results. So that has also resulted in higher other expenses.

Explains the sequential increase of almost INR200 crores in other expenses, attributing it to higher Q2 marketing spend and the consolidation of newly acquired subsidiaries.

Asked by Bansi Desai

GLP-1 Launch Strategy Direct
I think our India application, our CT for diabetes indication is already completed. We presented to the subject expert committee. And we have got approval that's a public information. We are waiting for the MA to be -- formal MA to be received, but our results were presented to the subject expert committee. We are very hopeful that very shortly, we will get the approval for GLP-1.

Provides an update on the regulatory progress for GLP-1 in India, signaling an imminent launch in a high-potential therapy area, which could be a significant growth driver.

Asked by Bharat

Enzene CDMO Gross Margin Profile Direct
The CDMO business, if I say the CDMO business is generally a higher margin than our overall corporate margin. So that's how I can say, so it's a high gross margin business generally. So I don't think margins are a consideration in that business. And that's why we are very confident about that opportunity. I think the way to the EBITDA margin because you don't incur much of material cost when you do CDMO.

Clarifies that the CDMO business is expected to have a higher gross margin profile compared to the overall corporate margin, reinforcing confidence in this new venture's profitability potential.

Asked by Tushar Manudhane

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Detailed narrative

Robust Q2 FY26 Performance Driven by Key Markets

Alkem Laboratories delivered an all-time high revenue from operations of INR4001 crores in Q2 FY26, marking a 17.2% year-on-year growth. This strong performance was supported by significant contributions from India sales, which grew 12.4% to INR2766 crores, and robust international growth. U.S. sales surged by 28% to INR764.9 crores, while non-U.S. sales increased by 32.4% to INR424.1 crores, indicating broad-based momentum across key geographies.

EBITDA Expansion and Margin Outlook

The company's EBITDA grew by 22.3% year-on-year to INR920.8 crores, resulting in an EBITDA margin of 23% for Q2 FY26. Despite this strong performance, management anticipates higher expenses in H2 FY26, including INR50-60 crores from the operationalization of the U.S. CDMO plant and a similar amount due to the loss of GST benefits from the Sikkim facility. However, the full-year EBITDA margin guidance remains firm at 19.5% to 20%, with a long-term target of 1% year-on-year margin improvement.

Strategic Investments in New Businesses

Alkem is actively investing in new growth avenues, including Medtech and Enzene CDMO. The Medtech business, which recently started, recorded minimal revenue of INR2.5 crores from approximately 900 knee replacements and incurred an EBITDA loss of INR5.5 crores in Q2 FY26, with breakeven targeted by FY28. The Enzene U.S. CDMO plant, operational since September, is expected to generate INR70-80 crores in revenue for FY26, with an annual run rate potential of INR300 crores from current capacity within 12-18 months, but will incur approximately INR50 crores in operational expenditure in H2 FY26.

GLP-1 Development and Launch

The company provided an update on its GLP-1 application for diabetes indication in India, confirming that the clinical trials are complete and approval has been received from the subject expert committee. Management is optimistic about receiving formal marketing authorization very shortly, positioning Alkem to be among the first players in this significant therapeutic area. This launch is expected to be a meaningful growth driver for the India business.

R&D Focus and Product Pipeline

R&D expenses for Q2 FY26 stood at INR130.2 crores, representing 3.3% of total revenue. Management expects R&D spend to catch up in H2, targeting 4-5% of revenue for the full year, aligning with its historical trend. The U.S. market saw meaningful new launches, particularly sacubitril/valsartan, which contributed significantly to the 28% growth in U.S. sales, with 3-4 more launches planned for H2 FY26. The company also became the number one player in the Acute segment in the domestic market.

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