Morgan Stanley hiked the target price of Sai Lifesciences, noting its higher-than-industry growth. The brokerage maintained an 'overweight' rating and hiked the target price to Rs 911 apiece from Rs 865. The current target price implies a 20.18% upside from Wednesday's closing price.
The CRDMO model of Sai Lifesciences is expected to enable the company to outpace the industry. The company said it had increased its capital expenditure sharply, implying confidence in future growth, according to the brokerage.
CRDMO stands for contract research, development, and manufacturing organisation.
Sai Lifesciences was able to grow its contract research business 26% year-on-year in financial year 2025 even as funding in the biotechnology environment softened. The discovery segment contributed 37% to the topline. In the contract manufacturing segment, Sai Lifesciences has more than 90 projects in the pipeline, Morgan Stanley said.
With opportunities for high revenue, Sai Lifesciences is hiking investments in new capacities and modalities. Capital expenditure has been hiked from Rs 500 crore to Rs 700 crore in financial year 2026, Morgan Stanley said.
Sai Lifesciences Q4 Earnings Key Highlights (Consolidated, YoY)
Net profit rose 57.21% to Rs 88 crore vs Rs 56 crore.
Revenue rose 32% to Rs 579.5 crore vs Rs 439 crore.
Ebitda rose 26.5% to Rs 157.6 crore vs Rs 124.6 crore.
Margin at 27.2% vs 28.3%.
Morgan Stanley estimates the earnings-to-price ratio to dip to 6.0% and 84%, respectively, for financial years 2026 and 2027. The brokerage built in lower other income and higher interest costs to account for increased capital expenditure.
Morgan Stanley valued Sai Lifesciences based on a one-year forward valuation of the CDMO sector, which is 59 times. The previous target price was aligned with Syngene International's one-year forward price-to-earnings ratio. The company's business is a mix of both contract research organisation and CDMO, whereas Syngene International is more CRO-focused.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
