Alkem Labs tanks on buzz of tax evasion

Alkem Laboratories dropped 6.50% to Rs 5067.25 on reports that the income tax department's investigation into pharma major has found large-scale tax evasion by the company.

Last September, the income tax department surveyed Alkem Laboratories' offices due to suspected tax evasion. The investigation reportedly revealed alleged excessive deductions totaling over Rs 1,000 crore, particularly from manufacturing units in Sikkim. Additionally, the company made substantial payments to doctors for prescriptions, amounting to hundreds of crores. These findings may result in significant penalties for Alkem Labs, the media reports suggested.

Alkem Laboratories is engaged in the development, manufacture, and sale of pharmaceutical and nutraceutical products. The company produces branded generics, generic drugs, active pharmaceutical ingredients (APIs), and nutraceuticals.

The pharma major's consolidated net profit rose 30.84% to Rs 594.96 crore on 9.31% increase in net sales to Rs 3323.87 crore in Q3 December 2023 over Q3 December 2022.

Shares of Alkem Laboratories have risen over 5% in one month, 12% in three months and 55% in one year.

On the technical front, the stock's daily RSI (relative strength index) stood at 63.17. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.

On the daily chart, the stock was trading above its 50-day, 100-day and 200-day simple moving average (SMA) placed at 5043.75, 4715.05 and 4286.14, respectively. These levels will act as crucial support zones in near term.

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