Buy Anthem Biosciences Ltd For Target Rs.850 by Prabhudas Liladhar Capital Ltd
Strong revenue growth
ANTHEM’s Q4FY26 EBITDA delivered strong growth of 37% YoY growth. We believe growth visibility remains strong supported by a deep CRDMO pipeline along with a growing commercial portfolio. Demand for commercialized molecules is expected to remain healthy aided by ramp-up in recently launched molecules and potential commercialization of late-stage programs. Further, the specialty ingredients business is likely to benefit from GLP-1 API scale-up from H2CY26. With planned capex of INR10-12bn, largely funded through internal accruals, the company is expanding capacities to support future growth. We estimate REVENUE/EBITDA/PAT CAGR of ~21%/22%/19% over FY26-28E driven by ~23% growth in CDMO services, ~11% in CRO and ~14% in specialty ingredients. At CMP, the stock trades at ~35x EV/EBITDA and ~50x P/E on FY28E. We maintain BUY rating and value the company at 55x FY28E P/E with revised TP of INR 850/share.
Strong revenue growth YoY:
Anthem reported revenue growth of 26% YoY to INR 6.1bn. On segmental front CRDMO reported strong growth of 31% YoY at INR 5.1bn whereas Specialty ingredients reported INR 981mn in revenues up 8% YoY. For FY26, CRDMO revenues grew by 18% YoY while specialty ingredients revenues grew by 4% YoY.
EBITDA higher, healthy OCF YoY:
EBITDA came in at INR 2.7bn (up 37% YoY), 15% above our estimates. OPM improved 330bps YoY and 660bps QoQ at 43.7%. Overall GMs stood at 64.7% up 130bps YoY but declined 160bps QoQ. GMs improved due to backward integration of an intermediate where Anthem earlier outsourced. Resultant PAT came in at INR 1.9bn (up 128% YoY); we est INR 1.7bn. EPS of INR 3.4/share for Q4FY26. Strong OCF generation of INR 8.4bn vs INR 2.5bn in FY25 aided by normalisation of inventory.
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