Buy Supriya Lifescience; target of Rs 401: KR Choksey

KR Choksey's research report on Supriya Lifescience

Supriya Life science's revenue beat our estimate (+5.8%) due to growth in Vitamin and Anti-Histamine segment. The EBITDA beat our estimate (+22.4%) due to lower-than-expected employee expenses, and lower-than-expected other expenses. Currently, the stock is trading at 19.3x/15.6x, based on FY25E/FY26E EPS respectively. We apply a PE multiple of 18.05x on FY26E EPS and arrive at a target price of INR 401/share and retain our rating of BUY. We believe the regulated market share will increase going forward which will support the profitability. Key areas to watch include commencement of Ambernath facility which is used for CDMO projects, launch of new products in FY25E and contracts in the pipeline which are expected to commercialize in H2FY25E.

Outlook

The stock has declined 1.7% since our last update. Currently, the stock is trading at 19.3x/15.6x, based on FY25E/FY26E EPS respectively. We expect the revenue to grow at 20.1% and Adj PAT to grow at 22.3% CAGR over FY24-FY26E. We apply a PE multiple of 18.05x on FY26E EPS and arrive at a target price of INR 401/share and retain our rating of BUY. The stock has upside potential of 15.2% from the CMP.