Buy Suven Pharmaceuticals; target of Rs 1400: ICICI Securities

ICICI Securities research report on Suven Pharmaceuticals

Suven’s rapid ascendance in the CDMO space has been remarkable. It has journeyed from being a small-molecule-focused CDMO to achieving eminence as one of the few CDMOs in India that offers contract manufacturing of oligonucleotides and ADCs. Its merger with Cohance is slated for completion in Q1FY26. Cohance’s ADC payload capabilities complement NJ Bio’s (acquired 56% stake in Dec’24) expertise in linker/bioconjugation technologies. Separately, Sapala (67.5%) gets Suven a foot in the door in oligoneuclutides/nucleic acid building blocks segment. We peg Suven’s (combined entity) FY25–27E FCF at ~INR 11.5bn – an enabler to develop/acquire newer capabilities under its Horizon-2 targets. Management is keen to achieve USD 1bn in revenue by FY30 (27% CAGR over FY25–30E) and USD 2bn by FY35 – via M&As and organic growth.

Outlook

Over FY24–27, we estimate the combined entity to register 18.8%/22%/21% revenue/EBITDA/PAT growth. We initiate coverage on Suven with a BUY rating and a DCF-based target price of INR 1,400.