Buy Supriya Lifescience; target of Rs 278: KR Choksey

KR Choksey's research report on Supriya Lifescience

During Q3FY23, Supriya lifesciences Ltd. reported a revenue of INR 1051mn, which dropped by 13.5% YoY and 6.1% QoQ as a result of headwinds faced by the firm in the China markets but marginally offset by the demand from other Asian countries. On the operational front, EBITDA decreased to INR 140.4mn, a decrease of by 67.9% YoY (-72.8% QoQ). The EBITDA margins stood at 13.4% ( -2266 bps YoY, -3271 bps QoQ). The margins were impacted due to an increase in labour costs, power and repairs and maintenance. There was a significant drop in PAT for the quarter, it fell to INR 95.18mn (-76.0% YoY, -43.3% QoQ). Net profit margins is at 9.1% (-2351 bps YoY, -595 bps QoQ) The reported EPS for the quarter is INR 1.18, declined from INR 2.10 in Q2FY23 and 4.93 in Q3FY22.

Outlook

At CMP, we maintain a “BUY” rating on the stock with a revised target price of INR 278/share, applying PE multiple of 14x on FY25E EPS, giving upside of 26.4% on CMP.

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