Alkem's profit drops 22% YoY despite 11% revenue growth
A lower sequential cost base lifted operating margin, but higher tax and interest kept year-on-year profit under pressure.
Filed 14 Aug 2026, 17:49 IST · after market close · Alkem Laboratories Ltd (ALKEM)
Key takeaways
- Consolidated net profit fell 22.00% YoY as a 19.14 percentage-point tax-rate increase and a 56.55% rise in interest offset 10.95% revenue growth.
- QoQ operating margin recovered 6.12 percentage points as revenue rose 3.80% and expenses fell 3.62%.
- At 20.48%, Alkem's operating margin was 2.67 percentage points below the 23.15% Healthcare peer median across 72 reporters.
Price around the results
Sequential rebound does not erase the YoY squeeze
Consolidated revenue grew 10.95% YoY, but expenses grew faster at 12.99%, narrowing operating margin by 1.44 percentage points. Interest rose 56.55%, while the tax rate increased 19.14 percentage points, leaving pre-tax profit almost unchanged and net profit down 22.00%. QoQ, revenue rose 3.80% and expenses fell 3.62%, lifting operating profit 48.06% and net profit 107.47%.
Margin recovered from Q4FY26, but remains below peers
Operating margin improved 6.12 percentage points QoQ to 20.48%, reversing the decline from 23.01% in Q2FY26 to 22.16% in Q3FY26 and 14.36% in Q4FY26. The margin was still 1.44 percentage points below Q1FY26 and 2.67 percentage points below the 23.15% median for 72 reported Healthcare peers. Other income contributed 19.73% of pre-tax profit, so reported earnings also had a material non-operating component.
Domestic and non-US growth supported the quarter
Management said the domestic business grew 13.2% YoY in Q1FY27, ahead of the Indian Pharmaceutical Market's 12.2% growth, while non-US growth came from double-digit expansion in key markets. The company said it received five US ANDA approvals during the quarter, including one tentative approval. The presentation said Alkem carved out its Trade Generics business into the Alkem Wellness subsidiary and flagged an Official Action Indicated regulatory status for the Daman formulations facility in August 2026.
No immediate market reaction after the late filing
The results were filed after market close, before a market response. Across the last eight results reactions, the stock rose twice and fell six times, with a median absolute move of 3.70%, indicating that post-results moves have more often been negative than positive.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,740 cr | ₹3,603 cr | +3.80% | +10.95% |
| Other income | ₹152 cr | ₹65 cr | +135.92% | +2.17% |
| Expenses | ₹2,974 cr | ₹3,086 cr | -3.62% | +12.99% |
| Operating profit | ₹766 cr | ₹517 cr | +48.06% | +3.65% |
| Operating margin (%) | 20.48% | 14.36% | — | — |
| Interest | ₹47 cr | ₹54 cr | -13.47% | +56.55% |
| Depreciation | ₹100 cr | ₹106 cr | -5.27% | +14.27% |
| Profit before tax | ₹771 cr | ₹422 cr | +82.69% | +0.11% |
| Tax | ₹251 cr | ₹171 cr | +46.35% | +143.94% |
| Net profit | ₹521 cr | ₹251 cr | +107.47% | -22.00% |
| EPS (₹) | ₹43.49 | ₹19.77 | +119.98% | -21.72% |
Operating margin of 20.48% compares with a Healthcare sector median of 23.15% across 72 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Alkem received five US ANDA approvals, including one tentative approval, during Q1 FY27.
- Non-US business growth was driven by double-digit growth across key markets.
New initiatives
- Alkem carved out its Trade Generics business into the Alkem Wellness subsidiary.
Competition
- Alkem is the sixth-largest pharmaceutical company in the Indian market.
- Alkem's domestic business grew 13.2% year over year versus 12.2% growth for the Indian Pharmaceutical Market in Q1 FY27.
Problems & risks
- The Daman formulations facility received an Official Action Indicated regulatory status in August 2026.
What to watch
- Whether operating margin holds above 20.48% after the 6.12 percentage-point QoQ recovery.
- Whether the tax rate moves below 32.47% after rising 19.14 percentage points YoY.
- Progress on the five US ANDA approvals received in Q1FY27 and the Daman facility's Official Action Indicated status.