Nomura has upgraded Alkem Labs to a Buy rating but has revised its target price down to ₹5,430, citing recent underperformance due to slower revenue growth in both its domestic and international segments. The company’s investments in new segments such as Biologic CDMO and Medtech have negatively impacted its EBITDA margin, with limited visibility on potential upside. Additionally, market concerns over potential US tariff impositions on generic pharmaceuticals and the stake sale by one of Alkem’s promoters have further pressured the stock.
Despite these challenges, Nomura believes that these concerns are already priced in, with Alkem currently trading at 21.2x one-year forward EPS. The brokerage sees long-term growth opportunities emerging from Alkem’s strategic investments in new segments. Nomura remains cautiously optimistic, suggesting that the stock’s valuation and the potential for recovery in its core business offer an attractive buying opportunity at current levels.
