Buy Privi Speciality Chemicals; target of Rs 3960: Motilal Oswal

Motilal Oswal's research report on Privi Speciality Chemicals

We analyzed the supply-demand dynamics of hospitals in the Noida/Greater Noida regions, given the recently commissioned hospital of Medanta. From the service availability perspective, there are ~6,000 superspecialty beds available for patients at industry level. From a demand perspective, hospitals in Noida/Greater Noida have a patient population radius of 250km. Patients can come from places such as Western UP, South Delhi, Uttarakhand, Haryana, and Rajasthan. The business prospects for Medanta remain promising as the population base, to be catered to by the healthcare services industry, remains underserved after utilizing the current bed capacity. While FY26 EBITDA would experience a drag due to opex loss from Noida, we expect an EBITDA breakeven within 12-15 months. Subsequently, FY27/FY28 would witness a clear runway for EBITDA growth, fueled by performance from Gurugram, Lucknow, Patna, Noida, Ranchi, and Indore.

Outlook

We expect PRIVI to deliver a CAGR of 27%/34%/46% in revenue/EBITDA/adj. PAT over FY25-28, driven by an increase in capacity of its core products, an increase in TAM with the addition of new products, and improving relationships with existing customers (Givaudan). We value the stock at 28x FY28E EPS of INR141 to arrive at our TP of INR3,960. We initiate coverage on PRIVI with a BUY rating.

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