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Hidden Gem - Piramal Pharma

ICICIdirect Research 13 Dec 2024 DISCLAIMER

Piramal is one of the largest Indian CDMO players with vertically integrated model and assets spread across India and regulated markets.

In CDMO, the company over the years have been focusing on high value services- 1) more focus towards catering to innovators, 2) offering of differentiated services such as high potency APIs,  Antibody drug conjugates (ADC), peptides among others and 3) offering of integrated services platform leveraging on global manufacturing network. We believe the emerging global tailwinds are important external factors besides improving fundamentals.

Based on strong visibility and capacities, the company has given upbeat guidance with CDMO revenues to be around US$ 1.2 billion (CAGR of ~13%) with 25% EBITDA margins leveraging on its globally diversified network of facilities across 3 continents by 2030. Note that this guidance excludes possible positive / negative implications from the Biosecure Act.

 In complex hospital generics, the company aspires to reach US$ 600 million revenues (CAGR of ~13%) with 25%+ EBITDA margins and in ICH segment the company aims to scale up revenues at a 9% CAGR to US$ 200 million in the next six years and achieve double-digit EBITDA margins by optimizing expenses.

We value PPL at ₹ 280 based on SoTP valuations, i.e. 23x FY26E CDMO EBITDA, 18x FY26E CHG EBITDA, 1.5x FY26E Consumer Healthcare Sales  and 10x PAT from AbbVie JV.

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