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.