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Motilal Oswal Report
Piramal Pharma Ltd. reported a lower-than-expected performance in Q3 FY24. While the company delivered in-line sales, its profitability was lower than expected due to higher opex.
Having said this, the scope of work in the contract development manufacturing organisation segment continues to move toward innovation-related work as well as integrated contract manufacturing.
We reduce our earnings estimate for FY24 by 3% on higher opex/interest outgo.
We maintain our estimates for FY25/FY26.
We continue to value Piramal Pharma on SOTP basis (15 times 12 months forward CDMO enterprise value/Ebitda, 13 times 12 months forward complex hospital generics EV/Ebitda, 15 times 12 months forward India consumer products EV/Ebitda and 18 times price-to-earning for its stake in Allergen) to arrive at a target price of Rs 165.
Piramal Pharma is implementing efforts to improve the sales outlook of its key segments, CDMO, CHG, and ICP. The company expects growth to be driven by-
increasing commercial manufacturing of on-patent molecules in CDMO;
increasing reach/expanding capacity in CHG; and
new launches and enhanced marketing in ICP.
Maintain 'Buy'.
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