Alkem Labs slumps 7% post Q4 show; brokerages see downside up to 15%

Shares of Alkem Laboratories slumped 6.9 per cent at Rs 4,900 on the BSE in Thursday’s intraday trade. The crack in the stock price of Alkem Labs came despite its profits soaring multifold on a year on year (Y-o-Y) basis in the fourth quarter of the fiscal year 2023-24 (Q4FY24).

On Wednesday, Alkem Laboratories reported a 313.9 per cent surge in its consolidated net profit, reaching Rs 293.5 crore in the quarter ending March 31, 2024, compared to Rs 70.9 crore in the corresponding period last year.

In Q4FY24, revenue from operations stood at Rs 2,935.8 crore, marking a 1.1 per cent increase from Rs 2,902.6 crore in the same period a year ago.

During the quarter under review, the company's earnings before interest, taxes, depreciation, and amortisation (Ebitda) rose by 13.8 per cent to Rs 402 crore, accompanied by a 14 per cent increase in margin.

For the full fiscal year 2023-24, the net profit surged by 82.4 per cent to Rs 1,795.7 crore, while revenue from operations saw a 9.1 per cent uptick, reaching Rs 12,662.5 crore.

Additionally, the pharmaceutical giant proposed a final dividend of Rs 5 per equity share with a face value of Rs 2 for FY24.

The brokerage stance after Alkem Labs Q4 show remained mixed as some gave it a neutral rating on the stock, while others gave it an underperforming tag. 

According to analysts at Nuvama Research, Alkem’s Q4FY24 revenue and Ebitda missed its  consensus estimates by 8 to 9 per cent  each while PAT missed estimates by 13 per cent. Domestic business was also flat YoY due to high base and low seasonality. 

The brokerage said that Alkem guiding for 10 per cent revenue growth and flat margins looks conservative, however it could see a strong anti-infective season in FY25E. Analysts at the brokerage have predicted an 11 per cent YoY revenue growth and EBITDA margin growth of

18.2 per cent in FY25E. 

“We are cutting FY25E/26E EPS by 5 per cent/2 per cent and rolling over to FY26E. We are downgrading the stock to ‘HOLD’ (from ‘BUY’) after the recent sharp rally and tax rate spike (25 per cent) in FY27E. Our target price is Rs 5,730 (earlier Rs 6,130),” Shrikant Akolkar, Aashita Jain, and Gaurav Lakhotia of Nuvama wrote in a 

Private Banks lead: Shares of private lenders which were seen underperforming state-run peers seem to be back on investors' radar. Banking shares hold significant weightage in the benchmark indices - the Sensex and the Nifty - hence a sharp movement in this shares, tends to impact the indices accordingly.

On Tuesday, Axis Bank and HDFC Bank rallied nearly 3 per cent each to Rs 1,267 and Rs 1,717, respectively. ICIIC Bank rallied over 2 per cent. SBI and Kotak Bank were up around a per cent each.

FIIs up long bets in F&O:Following finalization of the government at the Centre, foreign institutional investors have covered their short positions, and steadily build long positions in the index futures. As of June 24, FIIs net long in index futures rose to 1.44 it’s highest in more than two months. FIIs held 59.08 per cent net longs in index futures. 

FIIs have been net buyers in index futures in the last seven straight trading sessions. FIIs have added around 1.83 lakh across index futures, which include Nifty, Bank Nifty and others.

Outlook:Technically, the NSE Nifty seems on course to test the super trend line resistance on the daily chart at 23,850-odd levels; above which the index can extend the rally beyond 24,000-mark.

The BSE Sensex is closing in on a crucial Fibonacci resistance at 78,150 levels. The index will need to cross this, in order to open the doors for further upside in the year ahead.