Piramal Pharma Q4 Results Review: Goldman Sachs Highlights Strong Profit Growth Potential

Goldman Sachs has expressed confidence in Piramal Pharma Ltd.'s ability to deliver top-quartile profit growth, driven by high operating and financial leverage. The brokerage firm noted that the firm is well-positioned within its coverage to achieve significant profit growth.

Piramal Pharma reported a net profit increase of 51.6%, reaching Rs 153 crore, compared to Rs 101 crore in the same quarter last year. Revenue grew by 7.9% to Rs 2,754 crore from Rs 2,552 crore year-on-year. The company's Ebitda rose by 5.9% to Rs 561 crore, up from Rs 530 crore in the previous year. However, the Ebitda margin contracted to 20.4% from 20.8%.

Goldman Sachs highlighted that Piramal Pharma's revenue and Ebitda growth were below its estimates, but profit before tax was largely in line.

The Contract Development and Manufacturing Organisation segment grew slower at 8% year-on-year, but showed a strong quarterly growth of 40%. This was partially offset by the Complex Hospital Generics segment, which grew 6% year-on-year, 8% ahead of Goldman Sachs' estimates.

"Ebitda margin came in at 20.4%, as better gross margins were offset by higher wage and other expenses," the brokerage said.

It reiterated Piramal Pharma's aspiration to reach 25% Ebitda margin by FY30. Key growth drivers include the doubling of CDMO revenue through differentiated offerings and higher utilisation, continued ramp-up in CHG, following the Sevoflurane capacity expansion, and scaling up power brands in consumer healthcare.

"We recently initiated on Piramal with a buy rating, as it is well placed within our coverage to deliver top-quartile profit growth driven by very high operating and financial leverage," Goldman Sachs noted.

It has a 12-month sum-of-the-parts-based target price of Rs 265 per share on the stock, implying a 21% upside potential. Goldman Sachs also lowered its FY27-28 earnings per share estimates by 2-6%, to factor in management guidance for FY26-27.