Buy Supriya Lifescience; target of Rs 740: KR Choksey

KR Choksey's research report on Supriya Lifescience

SUPRIYA revenue beat our estimates significantly due to strong growth in Analgesic segment and regulated markets. EBITDA and Adj. PAT exceeded our estimates significantly due to better-than-expected gross profit, and lower than expected operating expenses. We raise our FY26E and FY27E EPS estimates by 1.6% each to INR 22.5 and INR 27.9, respectively. This upward revision reflects the company’s focus on launching new products in niche therapy areas, commissioning of additional production blocks at the Lote facility to enhance manufacturing capacity, and the benefits of its backward-integrated model in mitigating supply chain challenges. We expect the revenue to grow at 21.8% CAGR and Adj. PAT to grow at 23.6% CAGR over FY24-FY27E.

Outlook

We roll over our valuation multiple to FY27E and assign a PE multiple of 26.5x to arrive at a target price of INR 740 (previously: INR 644) reflecting continued strong growth in regulated markets with better pricing power and maintain “BUY” rating.