Anand Rathi 's research report on Suven Pharmaceuticals
Strong, 39%, growth in its CDMO pharma to `1.3bn led to Suven’s Q1 FY21 sales rising 20.7% y/y to `2.4bn. The unfavourable product mix, however, pulled the gross margin down 875bps to 70.3%. But operating leverage helped curtail the EBITDA margin decline (down 486bps y/y) to 47%. On the lower share of profit from the Rising Pharma JV and the higher tax rate, PAT was flat at `915m. Suven is on track in launching molecules (two in specialty chemicals over FY21-22 and one in pharma) in CDMO and in filing formulation products (six pending approval, another five being developed). Traction in its CDMO business and steady formulation launches would drive 17.3%/19.2% growth in sales/ earnings over FY20-23.
Outlook
We retain our Buy recommendation with a higher target of `760 (earlier `695).
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