Alkem Lab (ALKEM)
StalwartFairStock Score: 62/100 — STEADY
Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1
Key Financials
| Current Price | ₹5,368 |
| Market Cap | ₹64,182.49 Cr |
| P/E Ratio | 29.76 |
| ROCE | 20.38% |
| ROE | 19.78% |
| Dividend Yield | 0.37% |
| Profit Growth | -13.13% |
| Debt/Equity | 0.14 |
| Sales Growth | 12.68% |
| Free Cash Flow | ₹625 Cr |
| Promoter Holding | 51.2% |
| 52-Week Range | ₹5,052.05 — ₹5,933.5 |
| Sector | Pharmaceuticals & Biotechnology |
| Book Value | ₹1,155.87 |
Strengths
- Excellent capital efficiency: ROE 19.78% and ROCE 20.38%
- Healthy balance sheet with low debt/equity of 0.18
- Strong financial health signals: Piotroski F-Score 8/9 and Altman Z-Score 4.29
- Latest quarter shows solid momentum with sales of ₹3,737 Cr and net profit of ₹653 Cr
- Promoter holding of 51.20% indicates committed ownership
Concerns
- Rich valuation: P/E 28.09, P/B 5.50 and EV/EBITDA 15.06 against modest growth
- PEG of 10.33 suggests the earnings growth rate does not justify the multiple
- No margin of safety: Graham Number ₹2,114.58 and DCF value ₹844.41 are far below the market price of ₹5,516.60
- Low dividend yield of 0.80% offers little income support
AI Analysis
At ₹5,516, this is not the kind of bargain Benjamin Graham taught me to buy. Alkem is a decent business — the 19.78% ROE, 20.38% ROCE and a debt/equity of only 0.18 tell me capital is being used carefully. A Piotroski score of 8/9 and an Altman Z of 4.29 confirm a financially sound company. The latest quarter showed sales of ₹3,737 Cr and net profit of ₹653 Cr, while full-year profit growth is around 10.13% on 11.73% sales growth. That is steady, not spectacular. The five-year revenue CAGR of 7.90% reminds me that compounding is moderate, and free cash flow of ₹625 Cr supports the dividend yield of 0.80%. But the price is a problem. At a P/E of 28.09 and P/B of 5.50, the market is paying a rich price for a stalwart. The Graham number is only ₹2,114.58, giving a margin of safety of -166.70%; even a discounted cash flow estimate of ₹844.41 suggests the market has run far ahead of conservative value. A PEG of 10.33 tells me the valuation is not justified by current growth. This is a quality pharma business — with 51.20% promoter holding, it has committed owners — but I cannot buy quality at any price. I need margin of safety. Here, I would wait for a better price or a clear acceleration in earnings before acting.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer