Buy Suven Pharmaceuticals target of Rs 770: ICICI Direct

ICICI Direct's research report on Suven Pharmaceuticals

Q1FY21 revenues grew 20.7% YoY to Rs 238 crore driven by 39% YoY growth in the pharma segment to Rs 127.6 crore. Specialty chemical sales came in at Rs 97 crore vs. ~Rs 99 crore in Q1FY20. EBITDA for the quarter was at Rs 112 crore, up 9.4% YoY. EBITDA margins contracted 486 bps YoY to 47.0% due to lower gross margin performance, partially offset by lower personnel and other expenditure. PAT remained flat YoY at Rs 91.5 crore (vs. Rs 91.9 crore in Q1FY20). Delta vis-a-vis EBITDA was due to lower profit share from associates and a higher tax rate.

Outlook

We emphasise the strong execution capability and focused approach without the burden of success/failure of the innovative pipeline. We maintain BUY rating with a target price of Rs 770 based on 22x on FY22 EPS of Rs 35.

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