Piramal Pharma Shares Jump As Jefferies Hikes Target Price

Shares of Piramal Pharma Ltd. jumped over 8% as Jefferies hiked its target price on the stock and reaffirmed its 'buy' rating on the pharmaceutical company, citing promising long-term growth prospects. Target price was raised from Rs 195 per share to Rs 260 apiece, implying a 17% potential upside.

The key takeaway from Piramal's recent investor day is its ambitious target to double its revenue to over $2 billion and triple its Ebitda by fiscal 2030, Jefferies said.

The pharma giant is eyeing 25% Ebitda margin, which implies an annual growth of 12.2% in revenue and 20.3% in Ebitda. These goals are attainable, driven by the growing share of high-margin contract development and manufacturing organisation contracts, which are expected to benefit from operating leverage and boost return on capital employed, Jefferies said.

By fiscal 2030, Piramal anticipates reducing its net debt-to-Ebitda ratio from 3.4 times to 1 time, despite ongoing capital expenditure. This would also see RoCE climb to high teens from the current single-digit level.

The CDMO segment, accounting for 58% of Piramal's fiscal 2024 revenue, is the star performer. Jefferies forecasts that CDMO revenue could reach $1.2 billion by fiscal 2030, with margins climbing to 25%.

The hospital generics business, representing 30% of fiscal 2024 revenue, is also set for steady growth, driven by new launches and market expansion. Jefferies predicts this segment’s revenue will double by fiscal 2030, maintaining a 25% margin.

Meanwhile, the India Consumer Health division is expected to scale up through omnichannel strategies. Though margins are low at present, Jefferies sees a sharp improvement, with Ebitda margins reaching double digits by fiscal 2030.

Shares of Piramal Pharma rose as much as 8.15%, the highest level since Sept. 12. They pared gains to trade 6.79% higher at Rs 232.45 apiece, as of 09:55 a.m. This compares to a 0.02% decline in the NSE Nifty 50.

The stock has risen 67.22% year-to-date. Total traded volume so far in the day stood at 6.2 times its 30-day average. The relative strength index was at 65.02.

Nine analysts tracking the company maintain a 'buy' rating, according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 0.3%.