Sell Suven Pharmaceuticals; target of Rs 571: Geojit

Geojit's research report on Suven Pharmaceuticals

Suven Pharmaceuticals Ltd. (SPL) is a pharmaceutical research expert, primarily operating in Contract Development And Manufacturing Operations (CDMO). Suven's Q3FY24 revenue dropped to Rs. 213cr (-38.9% YoY) due to reduced demand in CDMO specialty chemicals and CDMO pharma. The EBITDA margin declined by 240bps YoY to 32%, resulting in a 52.2% YoY decrease in PAT to Rs. 52cr, influenced by global de-stocking. SSPL is persisting with its capex expansion strategy, allocating Rs. 200cr to the Suryapet project and Rs. 40cr to the new R&D facility.

Outlook

The company is focusing on mid- to long-term growth opportunities, including facilitating R&D labs, Suryapet expansion, operational capacity expansion, and inorganic growth expansion such as M&As. Owing to continuing cyclical headwinds and higher valuations, we reduce the recommendation to "SELL" with a target price of Rs.571 based on 33x FY26E EPS.