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Target: ₹127
CMP: ₹104.40
Piramal Pharma reported healthy performance in Q2-FY24 which was above our estimate. Revenue stood at ₹1,911.40 crore (+11.1 per cent YoY/9.3 per cent QoQ) due to mid-teen growth in CDMO business (+13.6 per cent YoY/18.9 per cent QoQ) with continued order inflows, steady growth in CHG business (4.8 per cent YoY) - primarily on account of healthy volume growth in Inhalation Anesthesia (IA) products, and new launches led to strong momentum in ICH (+12.8 per cent YoY/7.1 per cent QoQ).
EBITDA at ₹265.60 crore (53.9 per cent YoY/100.8 per cent QoQ) and margin at 13.9 per cent (+387bps YoY and +633bps QoQ) grew exponentially due to higher inventory and cost optimisation and operational excellence measures.
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The company reported adj. PAT of ₹5 crore as as against loss of ₹98.60 crore in Q1-FY24 and ₹37.30 crore loss in Q2-FY23. The management expects gross margin in the range of 64-65 per cent.
We remain optimistic on Piramal Pharma due to: Momentum in order inflows in CDMO and sustained growth in other 2 segments to drive top-line CAGR of 13.3 per cent between FY23-26; The gross and operating margin improvement will lead to EBITDA CAGR of 43.7 per cent between FY23-26; and higher operating profits will help in reduction of net debt and thereby reduce the finance cost.
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