Buy Emcure Pharmaceuticals Ltd For Target Rs. 1,695 By JM Financial Services
Multi-geography growth wheel accelerating
We hosted Emcure Pharmaceuticals for JM Investor Conference last week. Emcure was represented by Mr Vikas Thapar (President – Corporate Development, Strategy & Finance) and Mr Piyush Nahar (Senior Director – Corporate Development & Strategy). The company seemed to be upbeat about early entry into Semaglutide market with Novo Nordisk tie up for India market. Apart from this, double digit growth guidance in India, complex launches in Europe and RoW were some of the key highlights of the recent investor interactions.
* GLP-1 – early-mover advantage with powerful portfolio synergies: Emcure’s entry into the GLP-1 landscape marks a transformational shift in strengthening its chronic and metabolic care portfolio. The in-licensing of semaglutide provides a crucial four-month lead over the broader Indian generic market, allowing the company to shape early doctor recall and patient confidence in a therapy that will soon become highly competitive. Supported by Novo’s global credibility, semaglutide positions Emcure differently from local players. The GLP-1 addition also brings strong synergy across co-prescribed therapies such as vitamins, gastro and anti-nausea products, deepening Emcure’s chronic footprint and strengthening cardio-diabetic continuum.
* India – in-Licensing momentum and expanding depth: Emcure’s India business continues to deliver robust, above-industry growth driven by strong franchises across women’s health, gynaecology, pain, cardio and gastro, along with a growing chronic and sub-chronic presence. The business has maintained around 10% growth in recent quarters, helped by the integration of Sanofi’s cardio and oral anti-diabetic portfolios and a more specialized and structured field force. The company now has a INR 1.7–1.8bn anti-diabetic franchise and is set to benefit from the early launch of semaglutide. While margins appear moderated due to early-stage therapy investments such as CNS, oncology and derma and the lower-margin nature of in-licensed products, the core branded portfolio continues to enjoy healthy profitability. Management expects domestic margins to improve by 200–300 basis points over the next two to three years as these newer divisions scale up and the mix normalises toward higher-margin chronic brands.
* Canada – strong pipeline and first-generic opportunities: Canada has emerged as one of Emcure’s most promising international businesses, benefiting from its position as one of the top generic players in a market of roughly USD 8.5–9bn. Emcure is the largest Indian company with a true pan-Canada presence, operating across both English- and French-speaking regions with its own front-end. The business has been growing at over 30%, supported by a robust pipeline of more than 50 filed products representing a target market of over USD 3bn, including several differentiated and first-to-market opportunities where Emcure is either the only filer or among a very limited set of players. With approximately 2.5–3% market share today, the company has significant headroom to scale as more complex products are launched. The upcoming filing of semaglutide in Canada further strengthens the medium-term outlook, backed by in-house API and formulation capabilities that enhance both competitiveness and margins.
* Europe – entering margin acceleration cycle: Europe remains a strategically important, injectables-led business within a large and steadily expanding USD 70bn market, and Emcure is now moving into a phase of margin-led acceleration. The upcoming launch of liposomal amphotericin B, where the company will be the only generic player for at least 1-2 years in a >USD 300mn market, is expected to significantly elevate profitability. At the same time, Emcure is scaling commercialisation of the 120 MAs acquired through in Manx deal, with only ~40 active. Over the next 2-3 years, this further bring revenue, operating leverage & strategic depth.
* RoW – backed by ARV stability & complex first-to-market non-ARV launches: RoW markets represent Emcure’s strongest medium-term growth engine, combining reliable ARV performance with a high-value, differentiated non-ARV pipeline. ARV therapies continue to show steady growth and profitability, while the non-ARV segment is poised for rapid acceleration through first-to-market complex launches such as lenacapavir, liposomal amphotericin B, tenecteplase, bevacizumab and ferric carboxy maltose. Many of these categories face limited competition in emerging markets, and several—such as amphotericin B—experience frequent innovator shortages, raising the addressable opportunity. With a potential market size of roughly USD 2bn across key launches, Emcure expects RoW growth to sustain in the mid-tohigh teens, with non-ARV contributing significantly to future momentum.
* Overall margin and management’s growth outlook: Management remains confident in delivering consistent and profitable growth across the company’s diversified markets. Emcure expects low-teens revenue growth over the next two to three years, supported by mid-teensplus EBITDA expansion as complex generics, injectables, biosimilars and international launches ramp up. PAT is projected to grow at 20–25% or higher, extending the strong momentum recorded over the past six quarters, while RoCE remains above 20% with room to improve further. With a rising share of high-margin complex products and better utilisation of manufacturing capacities, Emcure is entering a multi-year period of operating leverage and margin improvement.
* Valuation: Emcure has been showing consistent improvement in the India business over the past few quarters, addressing a key investor concern. The volume growth in the domestic market has been gaining momentum and is likely to sustain. Additionally, Emcure is expected to have a headstart in GLP-1 launch in India, which should further enhance its growth prospects. We anticipate India revenues to grow at a 13% CAGR over FY25–28, while international business too is expected to deliver healthy growth driven by new launches. The stock currently trades at a discount to its peer average, despite expected 29% earnings CAGR over the next three years. We believe the continued recovery in the India business will help narrow this gap. We value Emcure at 24x Sep-27E EPS to arrive at a target price of INR 1,695 and maintain a BUY rating.
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