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Motilal Oswal Report
Piramal Pharma Ltd. delivered a better-than-expected operational performance in Q2 FY24, led by better traction in the contract development manufacturing organisation and India consumer product segments.
However, higher interest costs resulted in a modest profit after tax of Rs 50 million, compared to Ebitda of Rs 2.6 billion.
We maintain our estimates for FY24/FY25. We value Piramal Pharma on SOTP basis (11 times enterprise value/Ebitda for CDMO/complex hospital generics; 12 times EV/Ebitda for India consumer product, 18 times price-to-earning multiple for Allergen joint venture earnings) to arrive at a target price of Rs 115.
Piramal Pharma has delivered a healthy improvement in Ebitda margin, supported by a superior segment mix and better operating leverage.
While the company reduced its debt by Rs 10.5 billion to Rs 38 billion through a rights issue, we continue to monitor its efforts to further reduce its financial leverage. Maintain 'Buy'.
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