Orchid Pharma Q4 Results Review: A Strong Start For Enemetazobactam In India; Systematix Maintains 'Buy'

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Systematix Report

Orchid Pharma Ltd.’s reported revenue (Rs 2,375 million) was slightly higher than consensus expectations, while Ebitda (Rs 280 million) and Net earnings (Rs 223 million) were inline. Currently, there is intense pricing pressure in the export markets for Orchid Pharma’s top three APIs, which has limited FY25 revenue growth to 12.5% (Rs 9,219 million) despite a ~18–20% volume growth.

Losses on account of their branded formulation business is also impacting margins. About 8% of Ebitda was adversely impacted owing to investment in branded formulation business. During the quarter, Orchid Pharma also did not realize any royalties from Enmetazobactam as their partner Allecra Therapeutics has filed for bankruptcy.

As a result, the US launch for enmetazobactam also stands delayed. In India, Enmetazobactam is doing quite well and has achieved 10,000 patient treatments in H2 FY25 which we estimate should translate to an annual sales value of Rs. 400 million.

Overall, the AMS division is expected to become profitable in FY27/FY28. ORCP anticipates a muted FY26 due to pricing pressures and 7- ACA CapEx, but maintains mid-teen Ebitda margins (13–15%) via volume growth, mix optimization, and cost control.

The 7-ACA project faces a sixmonth delay (completion by December 2026), while Cefiderocol is on track for a Q2 FY27 India launch.

We revise our forecasts on Orchid Pharma as we knock off the contribution from Enmetazobactam royalties (due to Allecra’s bankruptcy), shift contribution of 7-ACA project to FY28 (from FY27) and account for the Dhanuka Laboratories merger from 2HFY26 (earlier guidance of full year FY26).

Based on our revised forecasts, we retain Buy with a target price of Rs 1,112. Our target price is based on 20 times multiple to base business earnings and assign a risk adjusted option value of Rs 440 per share based on 5x earnings contribution from 7- ACA, Cefiderocol, Enmetazobactam royalties and regulated market filings (ANDA with Para IV) by FY29.

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