Piramal Pharma Q4 Results Review - Solid Quarter; Grim Near-Term Outlook: ICICI Securities

ICICI Securities Report

Piramal Pharma Ltd. had a strong Q4 FY24 with better-than-expected performance on all fronts. Better traction in contract development manufacturing organisation business in FY24 drove a turnaround in operations with margins expanding 400 basis points YoY to ~14.6% (21.8% in Q4 FY24).

Outlook for CDMO business remains robust while investment in additional capacities and clinical studies for complex hospital generics molecules may restrict Ebitda margin expansion in FY25E to ~50 bps YoY.

Capex for new capacities may restrict its ability to generate free cashflow and repayment of debt in near further.

Management guides for an early teen growth in revenue and Ebitda in FY25E, while better order inflow of clinical molecules in innovative CDMO business may surprise positively.

The stock trades at 13.1 times FY26E enterprise value/Ebitda. Maintain Buy; raise target price to Rs 190.

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