Motilal Oswal Maintains 'Buy' On Piramal Pharma Despite Near-Term Headwinds; Q2 Results Review

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Motilal Oswal Report

We cut our Ebitda estimates for Piramal Pharma Ltd. by 21%/21%/17% for FY26/FY27/FY28, factoring in:

1. a gradual scale-up of the CDMO business,

2. supply challenges in the complex hospital generics segment, and

3. higher operational costs.

We value Piramal Pharma on an SoTP basis (18x EV/Ebitda for contract development manufacturing organisation business, 12x EV/Ebitda for CHG business, and 13x EV/Ebitda for ICH business) to arrive at a target price of Rs 240.

Pirama Pharma continues to:

1. enhance customer base/secure new contracts from existing customers in the CDMO segment, and

2. introduce new products in the CHG segment. With operational costs already being incurred, we expect operating leverage to drive earnings as revenue growth revives. Reiterate Buy.

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