Alkem Lab Q1 FY27 Results (NSE: ALKEM)
Signal: Margin pressure
The read
The operating trajectory is mixed: consolidated revenue accelerated to +10.9% YoY from +1.5% in Q3FY25 and +7.1% in Q4FY25, while gross margin expanded 204bps YoY to 67.9%; nevertheless, EBITDA margin fell 140bps YoY to 20.5% because employee and other expenses grew faster than revenue, and PAT fell 22.0% as tax rose to 32.5% of pre-tax profit from 13.3%.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹3,740.15 Cr | +10.9% | +3.8% |
| Net profit | ₹520.98 Cr | -22.0% | |
| EPS | ₹43.49 | -21.7% | |
| EBIT margin | 20.5% |
P&L walk
Consolidated revenue grew to ₹37,401.5 million, +10.9% YoY and +3.8% QoQ, with gross margin expanding 204bps YoY to 67.9%; however, EBITDA margin contracted 140bps to 20.5% and PAT fell 22.0% to ₹5,209.8 million because tax expense rose 143.9% to ₹2,505.0 million.
Key positives
- Consolidated revenue was ₹37,401.5 million, up 10.9% YoY and 3.8% QoQ, sustaining double-digit growth after ₹33,711.4 million in Q1FY26.
- Gross margin expanded 204bps YoY to 67.9%, while raw material cost declined to 24.3% of revenue from 24.5%, indicating a favourable input-cost movement even though the filing does not disclose the driver.
- Standalone revenue increased 12.5% YoY to ₹26,677.3 million and standalone EBITDA margin improved approximately 140bps to 22.8% as other expenses fell 19.0% YoY.
Key concerns
- Consolidated EBITDA margin declined 140bps YoY to 20.5% because employee benefits expense increased 16.7% and other expenses increased 25.6%, both faster than revenue growth of 10.9%.
- Consolidated PAT fell 22.0% to ₹5,209.8 million despite pre-tax profit before exceptional items rising 1.8%, as tax expense increased 143.9% to ₹2,505.0 million and the effective tax rate rose to 32.5% from 13.3%.
- Standalone-versus-consolidated earnings diverged materially: standalone PAT declined 13.1% to ₹5,699.8 million versus consolidated PAT decline of 22.0% to ₹5,209.8 million, reflecting weaker subsidiary and associate contribution.
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