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Our View

* Revenue acceleration from Mangalore API manufacturing may be back ended beyond FY23, especially as company guides to a 3‐5 year start up period

* Expect margins to inch up in FY23 as 200bps Mangalore cost inbuilt in current opex while revenues to start in FY23

* Build in 18%/22% growth in FY22/23 with contribution starting from Mangalore plant

* Remain 7% below consensus on FY22 and 4% below for FY23 estimates as we build in slower Mangalore ramp up

* Roll over 26x target PE to FY23 EPS for a revised TP Rs400. Await better entry point and retain SELL

Highlights

* Clocked revenue growth of 12.5% vs our estimate of 16.5% ‐  growth driven by sustained performance across all key segments – currency benefit has been ~3.5% yoy

* Deerfield collaboration to add 4 drug discovery projects – impact likely from an evolution perspective rather than near term dollars  

* Research facility opened in Feb 20 would have added to growth yoy; co expanded facility with addition of 90 scientists after initial capacity of 150 scientists in Q3

Risk to our call

Faster than expected growth from Mangalore facility would boost margins beyond 32% in FY23 which would drive further rerating

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