Alkem Q2 revenue rises 13.8% while reported profit drops 11.7%

Alkem Laboratories Ltd. reported Q2 FY27 revenue from operations of Rs 4,552 crore, up 13.8% year on year, while reported profit after tax fell 11.7% to Rs 675.3 crore. The company said a higher effective tax rate drove the profit decline, while Enzene CDMO costs and the Occlutech acquisition reduced operating margin.

Why did Alkem's profit fall despite revenue growth?

Alkem's reported profit after tax, after adjusting for non-controlling interest, declined to Rs 675.3 crore in Q2 FY27 from Rs 765.1 crore in Q2 FY26, even as revenue rose from Rs 4,001 crore to Rs 4,552 crore. Management attributed the 11.7% year-on-year profit decline mainly to a higher effective tax rate, without disclosing tax-rate figures in the presentation.

Earnings before interest, tax, depreciation and amortisation, or EBITDA, increased 11.3% year on year to Rs 1,025.2 crore, slower than the 13.8% increase in revenue. EBITDA margin was 22.5% in Q2 FY27 versus 23.0% a year earlier, a 50-basis-point decline. Management said Enzene contract development and manufacturing organisation, or CDMO, operating costs and the Occlutech acquisition, completed in July 2026, affected the margin.

What drove Alkem's Q2 FY27 revenue growth?

Alkem's India business and non-US international markets supported Q2 FY27 sales growth, while US sales increased more modestly. India sales rose 9.5% year on year to Rs 3,027.5 crore, representing 68% of total sales of Rs 4,481.5 crore. Revenue from operations was Rs 4,552 crore and includes other operating income, according to the presentation.

The domestic branded business grew 12.1%, while trade generics expanded in the mid-single digits. According to IQVIA Secondary Sales Audit data, Alkem's 13.8% value growth matched Indian Pharmaceutical Market, or IPM, growth of 13.8% in Q2 FY27. Acute therapies increased 12.1% against IPM growth of 12.3%, while chronic therapies grew 22.4%, compared with 16.0% for the IPM.

US sales grew 2.4% year on year to Rs 783 crore and made up 17% of Q2 sales, with the company saying volume growth largely led the increase. Non-US international sales were Rs 671 crore, or 15% of sales, and rose 58% year on year. Excluding Occlutech sales, management reported non-US international growth of 29% year on year and 14% quarter on quarter.

How did Alkem's business mix affect Q2 margins?

Alkem remained predominantly a pharmaceutical business in Q2 FY27, with pharma contributing Rs 4,277.7 crore, or 95%, of sales of Rs 4,481.5 crore. MedTech contributed Rs 133.1 crore, or 3%, and biotech contributed Rs 70.4 crore, or 2%. The presentation identifies Occlutech as Alkem's MedTech platform for global expansion following the July 2026 acquisition.

The quarter's margin figures show that the 220-basis-point year-on-year expansion in gross margin to 67.2% did not fully reach EBITDA margin. EBITDA margin declined 50 basis points to 22.5%, and management specifically cited Enzene CDMO operating costs and the Occlutech acquisition as the reasons. This occurred while pharma still accounted for 95% of Q2 sales.

Within India, Alkem said it grew faster than the IPM in eight key therapies in Q2 FY27. Its anti-diabetic business rose 27.2%, against IPM growth of 17.7%, while pain and analgesics increased 23.9%, compared with 15.4% for the IPM. Alkem also launched 26 products in H1 FY27 and had an India formulations sales force of about 14,500 medical representatives.

How does Q2 FY27 compare with Alkem's recent quarters?

Alkem's Q2 FY27 revenue from operations of Rs 4,552 crore was the highest across the five quarters presented, exceeding Rs 3,740.2 crore in Q1 FY27 and Rs 4,001 crore in Q2 FY26. EBITDA rose from Rs 766.1 crore in Q1 FY27 to Rs 1,025.2 crore in Q2 FY27, lifting EBITDA margin from 20.5% to 22.5% sequentially.

Reported profit also improved from Rs 520 crore in Q1 FY27 to Rs 675.3 crore in Q2 FY27. However, it remained below the Rs 765.1 crore reported in Q2 FY26, unlike both revenue and EBITDA, which were higher year on year. The comparison separates sequential operating recovery from the year-on-year reduction in reported profit that management linked mainly to tax.

Research and development, or R&D, expenditure rose to Rs 195.3 crore in Q2 FY27, equal to 4.3% of revenue from operations, from Rs 130.2 crore, or 3.3%, in Q2 FY26. Alkem's US pipeline had 193 abbreviated new drug application, or ANDA, filings and 170 approvals as of 30 September 2026, including 18 tentative approvals, although no ANDA approvals were recorded in Q2 FY27.

What regulatory and balance-sheet matters should readers monitor?

Alkem reported net cash of Rs 4,905.4 crore as of 30 September 2026. Its Daman formulations facility received OAI status, and the company said it had submitted its response and remediation was in progress. The presentation does not state a completion date for the remediation process.

The US Food and Drug Administration inspection of Alkem's Mandva active pharmaceutical ingredient plant was completed with zero observations. Separately, the company had filed two new drug applications and one biologics licence application, and had received approval for two new drug applications as of 30 September 2026, alongside its 170 cumulative ANDA approvals.

Conclusion

Alkem's Q2 FY27 results show that revenue growth of 13.8% to Rs 4,552 crore and a 220-basis-point increase in gross margin to 67.2% did not translate into higher reported profit. EBITDA rose to Rs 1,025.2 crore, but its margin declined 50 basis points, while reported profit fell to Rs 675.3 crore as management cited a higher effective tax rate.

The next disclosures to watch are progress on remediation at the Daman facility and the operating-cost effect of Enzene CDMO and the July 2026 Occlutech acquisition. Alkem's US development pipeline stood at 193 ANDA filings and 170 approvals on 30 September 2026, but the company recorded no ANDA approvals during Q2 FY27.