Buy Concord Biotech Ltd For Target Rs. 1,965 By Choice Broking Ltd
Strong Orders, Launches and Injectables Ramp-Up to Drive Growth
Despite sequential lumpiness in revenue and margins, we believe CONCORD remains on track to meet its targets. Management guides for 18%+ revenue CAGR over the next three years with EBITDA margin at 40-42% in FY26E. While margins may see a temporary dip in FY26E due to higher costs from the ramp-up of the new injectables facility, growth will be supported by healthy new launches and a healthy order book. We have revised our FY26E/FY27E estimates down by 2.3%/1.8% and now value the company on the average of FY27 and FY28 EPS. Our target multiple is lowered to 35x (from 40x) to reflect slightly softer growth and return ratios relative to peers. This yields a target price of INR 1,965 (earlier INR 2,120), and we maintain our BUY rating.
Steep Decline on Seasonality; Margins Hit by Cost Pressures
* Revenue declined 5.5% YoY / 52.5% QoQ to INR 2.04 Bn due to seasonality (vs. CIE estimate: INR 2.10 Bn).
* EBITDA fell 24.5% YoY / 67.8% QoQ to INR 0.61 Bn, impacted by higher costs from new facility scale-up; margins contracted 757 bps YoY / 1,420 bps QoQ to 30.1% (vs. CIE estimate: 31.0%).
* APAT decreased 26.1% YoY / 68.6% QoQ to INR 0.44 Bn (vs. CIE estimate: INR 0.41 Bn).
Mid-Teens API Growth Sustained by Launches
The company typically sees a softer quarter following strong growth owing to order procurement cycles. In line with this, API revenue saw a sharp decline following a robust Q4. Product pricing remains largely stable, particularly in immunosuppressants, where the company has a strong presence. The API pipeline remains healthy, with 10–12 products under development and 2–3 nearterm launches in high-potential markets with only 2–3 competitors—for example, Nystatin. The Limbasi API unit is operating at 57% capacity (vs. 53% in the previous quarter) and the Dholka facility at 75%. While some QoQ lumpiness may persist due to seasonality, we expect FY26 API revenue to sustain a healthy mid-teens growth trajectory.
CDMO Orders, New Launches to Drive Formulations’ 30% CAGR
The company has commissioned its injectables facility, initially targeting domestic market launches, currently operating at 26% capacity. It has also incorporated a US subsidiary—Stellon Biotech Inc—to drive marketing, distribution and commercialization in the US, supporting market share gains for products, such as Teriflunomide tablets. With multiple new filings and approvals expected in international markets, we project the segment to expand at a 30% CAGR over the next three years, driven by a strong CDMO order book and launches in new therapeutic segments.
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SEBI Registration no.: INZ 000160131
