Alkem profit falls 14.37% despite revenue growth as tax rate jumps
Margins recovered sequentially as revenue grew faster than expenses, but higher tax and interest costs offset the operating improvement.
Filed 12 Nov 2026, 13:54 IST · Alkem Laboratories Ltd (ALKEM)
Key takeaways
- Q2FY27 consolidated net profit fell 14.37% year on year to Rs 667.13 cr despite 13.77% revenue growth, as the tax rate rose 20.24 percentage points and interest cost increased 64.68%.
- Operating margin expanded 2.04 percentage points sequentially to 22.52% because revenue grew 21.71%, faster than expenses at 18.58%.
- Other income accounted for 16.88% of pre-tax profit, making it a material contributor to reported earnings.
Price around the results
Revenue growth did not translate into higher year-on-year profit
Alkem Laboratories reported consolidated revenue growth of 13.77% year on year in Q2FY27, while operating profit rose 11.34%. Pre-tax profit increased 11.58%, but net profit fell 14.37% because the tax rate rose 20.24 percentage points and interest cost increased 64.68%. The gap between operating and net profit growth was therefore driven below the operating line rather than by weak sales.
Sequential margin recovery came with a mixed earnings profile
Operating margin improved 2.04 percentage points sequentially because revenue growth of 21.71% outpaced expense growth of 18.58%. Year on year, however, expenses grew 14.50% against revenue growth of 13.77%, narrowing the margin by 0.49 percentage points. Other income contributed 16.88% of pre-tax profit, so reported earnings included a meaningful non-operating contribution.
Margins have recovered from the Q4FY26 trough
Operating margin has risen for two consecutive quarters, from 14.36% in Q4FY26 to 20.48% in Q1FY27 and 22.52% in Q2FY27. The latest margin was 0.86 percentage points above the 21.66% median for 91 Healthcare peers that had reported the quarter. It remains below the 23.01% recorded in Q2FY26, so the recovery has not fully restored the year-ago level.
India and overseas markets supported the quarter's expansion
Management said India sales grew 9.5% year on year in Q2FY27, while non-US sales grew 58%, helped by double-digit growth in Latin American markets. The company said it continued investing to build its US product pipeline as of September 30, 2026. Management also said Denosumab received approval for the EMA vial presentation and marketing authorization in South Korea.
Past result-day moves have more often been negative
A current post-result market move is not yet part of the record. Across the last eight results, the stock rose three times and fell five times, with a median absolute move of 3.70%, providing the relevant historical context for the eventual reaction.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹4,552 cr | ₹3,740 cr | +21.71% | +13.77% |
| Other income | ₹169 cr | ₹152 cr | +10.75% | +63.37% |
| Expenses | ₹3,527 cr | ₹2,974 cr | +18.58% | +14.50% |
| Operating profit | ₹1,025 cr | ₹766 cr | +33.83% | +11.34% |
| Operating margin (%) | 22.52% | 20.48% | — | — |
| Interest | ₹58 cr | ₹47 cr | +23.70% | +64.68% |
| Depreciation | ₹137 cr | ₹100 cr | +36.82% | +46.44% |
| Profit before tax | ₹999 cr | ₹771 cr | +29.50% | +11.58% |
| Tax | ₹332 cr | ₹251 cr | +32.50% | +185.56% |
| Net profit | ₹667 cr | ₹521 cr | +28.05% | -14.37% |
| EPS (₹) | ₹56.48 | ₹43.49 | +29.87% | -11.74% |
Operating margin of 22.52% compares with a Healthcare sector median of 21.66% across 91 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.68% | -2.86% |
Volume on the results session was 9.43× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- India sales grew 9.5% year on year in Q2 FY27.
- Non-US sales grew 58% year on year, driven by double-digit growth in Latin American markets.
New products
- The company received approval for the Denosumab EMA vial presentation.
- The company received marketing authorization for Denosumab in South Korea.
New initiatives
- The company continued investing to build its US product pipeline as of September 30, 2026.
Competition
- Alkem is the number-three player in acute therapy in India.
What to watch
- Whether operating margin holds above 22.52% after its 2.04-percentage-point sequential recovery.
- Whether the tax rate moves down from 33.22% and reduces the gap between pre-tax profit and net profit.
- Whether India sales growth improves from 9.5% and non-US growth remains connected to the reported 58% pace.