Buy Piramal Pharma; target of Rs 310: Motilal Oswal

Motilal Oswal is bullish on Piramal Pharma has recommended buy rating on the stock with a target price of Rs 310 in its research report dated October 24, 2024.

Broker Research

October 27, 2024 / 16:09 IST

Buy

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Motilal Oswal's research report on Piramal Pharma

Piramal Pharma (PIRPHARM) delivered better-than-expected operational performance in 2QFY25 fueled by superior traction in the CDMO segment (59% of sales). Following earnings deterioration in FY23/FY24, PIRPHARM is exhibiting healthy recovery in 1HFY25. Considering the advancement in clinical development of certain CDMO projects, the company is investing USD80m to double its sterile fill-finish capacities at the Lexington site. We trim our FY25/FY26/FY27 estimates by 6%/3%/4% to factor in: 1) higher financial leverage, and 2) ongoing supply-chain issues in the injectable pain management segment. Compared to 15%/37% YoY revenue/EBITDA growth for 1HFY25, we expect 11%/15% YoY growth in revenue/EBITDA to INR50b/INR9b in 2HFY25.

Outlook

We value PIRPHARM on an SOTP basis (20x EV/EBITDA for the CDMO business, 12x EV/EBITDA for the complex hospital generics (CHG) business, and 13x EV/EBITDA for the India consumer products (ICP) business) to arrive at our TP of INR310. With enhanced inquiries on the CDMO front at industry level in India, we believe PIRPHARM is well poised to benefit from its differentiated capabilities and capacities. Further, it is increasing its offerings in the CHG segment through an established global network. Accordingly, we expect its PAT to scale up to INR7b by FY26 from INR560m in FY24. Reiterate BUY.

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