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DRChoksey Research Report
Supriya Lifescience Ltd. had a strong revenue growth on a YoY basis driven by robust growth in anaesthetic segment and double-digit growth in the vitamins segment.
The company was able to continue the growth momentum by penetrating into regulated markets such as Europe where the revenue contribution has significantly increased. Profitability margins expanded on account of favorable geographical mix and product mix.
Overall, the quarterly numbers beat our estimate across the board, which further solidifies our belief in the company’s prospects. We believe new product approvals, and scaling up of molecules in regulated markets will drive growth going forward.
The contract development manufacturing organisation projects which are in the pipeline can contribute significantly to top-line and profitability over the long term.
Currently, the stock is trading at price-to-earning multiples of 18.4 times and 15.0 times based on FY25E/FY26E EPS, respectively. We introduce FY26E estimates; expect FY23-FY26E revenue compound annual growth rate of 22.0% and corresponding adjusted profit after tax CAGR of 27.1%.
We apply a PE multiple of 17.5 times to our FY26E EPS of Rs 22.94 and arrive at a target price of Rs 401/share (Rs 272 previously).
Accordingly, we upgrade our rating on the stock to 'Buy' from 'Accumulate', with a potential upside of 17.0%.
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