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Hidden Gem RPG Life Sciences - Domestic formulations in a sweet spot (Market Cap 4400 cr; Target price of ₹3,340)

ICICIdirect Research 07 Aug 2026 DISCLAIMER

RPG Life Sciences is the pharmaceutical arm of the RPG Group with a focus on domestic formulations which accounted for ~70% of FY26 revenues (₹480 crore). Exports and API business accounted for the rest. The focus on domestic formulations resembles the business model of an MNC Pharma company.
The domestic business has undergone a significant business transformation over the past few years with the induction of external domain experts being assigned the leadership roles.  The focus has shifted towards high-margin chronic and specialty therapies, strengthening of sales force productivity, and streamlining of operations. That has resulted into domestic revenue growth trajectory improving to 15-18% during FY22-FY26 from 7-8% earlier. Consequently, the company's EBITDA margins also improved from ~10-12% to +22% at present.
The domestic formulations have grown into niche areas of biosimilars, immunosuppressants, kidney-care, among others. The MR productivity has also improved from ~₹3 lakh to ~₹7 lakh per month.
The company is now looking to strengthen its API business (15% of the revenues) as well. A key strategic development has been the demerger of the API business and induction of InvAscent, a healthcare-focused private equity investor, which acquired a 40% stake for ₹243 crore, valuing the API business at ~₹608 crore (~4x FY28 API sales). Further, InvAscent and RPG Life Sciences have committed to invest nearly ₹700 crore towards organic and inorganic expansion. We believe this strengthens the API platform, creates a meaningful medium-term growth opportunity, and enhances the potential for value unlocking.
Backed by a strong chronic-focused domestic franchise, backward-integrated manufacturing capabilities, disciplined execution, and best-in-class profitability, we believe RPG Life Sciences is well-positioned to deliver sustainable earnings growth and remains an attractive play among domestic-focused pharmaceutical companies.
We have BUY rating on the stock with a target price of ₹3,340 per share.

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