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Motilal Oswal Report
Piramal Pharma Ltd. posted a better-than-expected performance in Q1 FY24. It witnessed a strong uptick in the order book for its contract development and manufacturing organisation business, supported by sustained volume growth in Sevoflurane in the complex hospital generics segment.
Although Piramal Pharma reported a net loss of Rs 986 million in Q1 FY24, we believe that with the revival in business and debt reduction, it will return to profitability.
We raise our FY24/FY25 estimates by 1%/3%, factoring in better growth prospects in the CDMO/CHG segments and a reduction in interest costs.
We value Piramal Pharma on an SOTP basis (11 times enterprise value/Ebitda of CDMO business, 11 times EV/Ebitda forcomplex hospital generics, and 12 times India consumer products) to arrive at a target price of Rs 125.
Piramal Pharma remains on track to improve its earnings outlook and return ratios through-
increased visibility for innovation-related work and active pharma ingredient business in the CDMO segment, and
incremental launches and market share gains in existing products in the complex hospital generics/India consumer products segment.
We reiterate our 'Buy' rating on the stock.
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