Orchid Pharma - A Preferred Play On Import Substitution Opportunity: Systematix Initiates Coverage With A Buy

Systematix Research Report

We initiate coverage on Orchid Pharma Ltd. with a 'Buy' rating and a target price of Rs 884, based on 30 times FY26E earnings per share. Orchid Pharma earnings is expected to multiply manifold over the next five years as it will commercialise its cephalosporin backward integration project, benefit from launch of novel cephalosporin antibiotic and leverage its unique positioning in cephalosporin space for niche launches.

Orchid Pharma (a Dhanuka group company) is an integrated active pharmaceutical ingredient player focussed on manufacturing of cephalosporin API (a class of antibiotics).

The company has the broadest portfolio of cephalosporin APIs among peers and is the only Indian company (and one among three globally) to have a U.S. Food and Drug Administration approved sterile cephalosporin manufacturing facility.

Recently announced merger of Dhanuka labs (promoter company) with Orchid Pharma would enhance the competitive positioning of the company as the combined entity will benefit from larger scale in cephalosporin manufacturing and a wider customer base.

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