Piramal Pharma Shares See 40% Upside Potential As InCred Equities Initiates Coverage — Check Target Price

InCred Equities has initiated coverage on Piramal Pharma Ltd. with an 'Add' rating and a target price of Rs 276. This price target implies a 40.8% upside compared to the current market price of Rs 196. The brokerage firm's positive outlook is based on the company's diversified business model, which combines high-growth outsourcing with stable, cash-generative operations.

Powered by its three core business segments according to InCred, positions Piramal Pharma as a compelling integrated player in the Indian pharmaceutical sector.

Piramal Pharma’s business is built on three distinct engines. The first is its Contract Research, Development, and Manufacturing Organization or CDMO arm, which offers an end-to-end service from discovery to commercial supply.

The company's differentiation comes from its expertise in complex modalities like Antibody-Drug Conjugates, High-Potency Active Pharmaceutical Ingredients, and peptides, supported by a multi-region global footprint. While this segment offers high growth potential, its performance is sensitive to factors such as biotech funding cycles and regulatory approval timelines.

The second key segment is Complex Hospital Generics. This part of the business provides stable, cash-generating operations, anchored by specialised products like inhalation anaesthetics, particularly Sevoflurane, and specialized injectables.

This segment, with its predictable cash flow, underwrites the overall financial resilience of the company. However, it operates in tender-driven markets that face typical low single-digit annual price erosion.

Finally, the Piramal Consumer Health business, which includes well-known brands such as Littles, Polycrol, and Lacto Calamine, serves as a steady source of cash flow in India. This segment leverages strong brand recall and an established distribution network.

It provides a counterbalance to the more cyclical nature of the CDMO business and offers options for future growth through premiumisation and digital expansion. While this model is asset-light, it requires sustained marketing investments and disciplined product curation.

The analyst assumes that service business Ebitda margins will improve from an estimated 12.9% in financial year 2026, expanding by approximately 50 basis points annually through financial year 2028 as CDMO utilisation improves and the CHG business mix normalises.

The note, points out that the key downside risks include a slower-than-expected ramp-up in CDMO utilisation, margin pressure from cost inflation, and potential delays in deleveraging.

All 14 analysts tracking the company have a 'buy' rating on the stock, according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 259.9, implying an upside of 32%.