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ICICI Securities Report
Cohance Ltd.'s Q4 and FY26 performance remained under pressure due to continued inventory de-stocking in two large pharma contract development manufacturing organisation products, product-specific challenges in the active pharma ingredient segment and a delay in the receipt of new orders at NJ Bio.
While the company continues to have a strong near-term pipeline of four late-stage phase3 projects, commercialisation timelines for these remain uncertain. Recovery in FY27 would depend on either of these projects getting commercialised, along with better traction in its generics division and fresh order inflow at NJ Bio.
Though de-operating leverage in the near term may keep margins in the 21–24% range, this may likely persist until either of the growth triggers kick in.
ICICI Securities cuts its FY27/28E earnings by ~23%/30%% to factor in slower growth and lower margins.
At current market price, Cohance trades at 36.3x FY27E and 29.1x FY28E EV/Ebitda.
The brokerage downgrades the stock to Reduce from Hold, with a lower target price of Rs 415 (Rs 350 earlier) based on 25x EV/Ebitda.
Key upside risks: Surge in new order inflow, resumption of supplies for existing large projects, new order wins for commercial projects and M&As.
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