The brokerages expects Suven to register 18.8%/22%/21% revenue/Ebitda/PAT growth over FY24–27E. The company is also likely to generate free cash flow of Rs 18.3 billion over FY25–27E, which should help meet its organic initiatives. RoE is likely to improve from 16.9% in FY24 to 18.6% in FY27E. At current market price, the stock trades at 50.4x FY27E earnings and 31.5x EV/Ebitda.
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ICICI Securities Report
Suven Pharmaceuticals Ltd.'s rapid ascendance in the contract development manufacturing organisation space has been remarkable. It has journeyed from being a small-molecule-focused CDMO to achieving eminence as one of the few CDMOs in India that offers contract manufacturing of oligonucleotides and ADCs.
Its merger with Cohance is slated for completion in Q1 FY26. Cohance's ADC payload capabilities complement NJ Bio's (acquired 56% stake in Dec'24) expertise in linker/bioconjugation technologies.
Separately, Sapala (67.5%) gets Suven a foot in the door in oligoneuclutides/nucleic acid building blocks segment. We peg Suven's (combined entity) FY25–27E free cash flow at ~Rs 11.5 billion – an enabler to develop/acquire newer capabilities under its Horizon-2 targets.
Management is keen to achieve $1 billion in revenue by FY30 (27% CAGR over FY25–30E) and $2 billion by FY35 – via M&As and organic growth. Over FY24–27, we estimate the combined entity to register 18.8%/22%/21% revenue/Ebitda/PAT growth.
We initiate coverage on Suven with a Buy rating and a DCF-based target price of Rs 1,400.
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