Indegene shares rose 4 percent on September 23 after Nomura initiated coverage on the stock with a 'Neutral' rating and a target price of Rs 700 per share, emphasising the company's scalable business model, deep domain expertise, and long-standing relationships within the life sciences sector.
At 10.45 AM, Indegene's shares traded 3.9 percent higher at Rs 688. The new target price set by Nomura indicates an upside of nearly 2 percent from Indegene's current market price. Indegene shares have gained 20 percent in the past six months, outperforming Nifty 50 which gained 17 percent during the same period.
Indegene is expected to benefit from the growing digital adoption in life sciences, with a strong client base across large and emerging pharma companies, Nomura said in a note.
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Nomura's report also highlighted Indegene's strong management team, robust industry analyst rankings, and a well-balanced approach to mergers and acquisitions (M&A). Nomura expects the company to achieve 12 percent revenue growth and 18 percent earnings growth over FY25-27.
However, key risks include the company's reliance on the life sciences vertical, high revenue concentration from its top five clients (46 percent), and the use of $100 million in cash without a clearly defined dividend policy. Additionally, potential challenges from in-sourcing trends could impact growth, Nomura said.
The life sciences sector has traditionally been slow to adopt technology due to heavy regulations and consistent profitability. Sales and marketing (S&M) spending, which accounts for 22-27 percent of revenue between CY11-23, has largely remained in-house, with only 7-12 percent outsourced.
Nomura said that this in-house approach often struggles with personalisation, global and local content management, and siloed data, leading to slower decision-making. However, changing dynamics—such as healthcare professionals shifting to hybrid engagement and the need for more personalised campaigns—are driving greater digital adoption. Outsourcing of S&M functions is expected to grow at a 15 percent CAGR over CY22-26, Nomura pointed out.
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