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Shares of Alkem Laboratories fell over three percent in early morning trade on Monday after the company cut down its margin guidance for financial year 2023 from 16 percent to 15 percent owing to cost pressures. The company announced its financial earnings for the July-September quarter on Friday.

For the quarter, the company reported a 39 percent decline in consolidated net profit (after minority interest) at Rs 330 crore, from Rs 544.8 crore in the corresponding period a year ago. The revenue from operations stood at Rs 3,079.3 crore, a 10 percent increase from the corresponding period a year ago.

Earnings before interest, tax, depreciation and amortisation declined 27.3 percent for the quarter and stood at Rs 453.9 crore. The EBIDTA margin stood at 14.7 percent as compared to 22.3 percent in the corresponding period a year ago.

Also read: Alkem Labs gets US FDA nod for chest pain drug; Shares rise

The company was impacted by international sales which saw an increase of a mere three percent year-on-year while the domestic sales saw a robust growth of 13 percent year-on-year.

In international sales, revenue from US sales declined 0.9 percent and stood at Rs 604 crore as compared to Rs 609 crore in the corresponding period a year ago.

What do analysts say?

Global brokerage firm Jefferies has an ‘underperform’ rating on Alkem Laboratories shares with the target price at Rs 2,803. The brokerage firm is of the view that the near term margin challenges will further limit the company’s EBIDTA growth.

Bernstein has a ‘market perform’ rating on the shares of Alkem Laboratories with the target price at Rs 2,917. The firm is of the view that although sales from India supported the growth for the company in the July-Spetember quarter but US sales dragged it down. Due to the US price erosion, the company further missed EBITDA estimates.

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