Buy Emcure Pharmaceuticals Ltd for the Target Rs 2,330 by Motilal Oswal Financial Services Ltd
Domestic traction improves; overseas momentum intact
Improving growth momentum driven by strong brands and pipeline expansion
* We analyzed Emcure’s domestic formulation (DF) segment and observed green shoots of recovery in the past couple of months, led by gynecology, anti-infectives, cardiac and anti-diabetic, while key brands continued to deliver strong growth.
* Emcure’s European growth outlook is supported by traction in niche products such as liposomal amphotericin B and an exciting pipeline of 55+ products, including complex injectables. We expect a 17% CAGR over FY26- 28E.
* Canada business is gaining traction, with growth accelerating from 18.7% in FY26 to 25% in 1QFY27, supported by market-share gains, acquisitions and an attractive pipeline of 50+ products, including eight near-term firstgeneric opportunities and complex generics.
* RoW business growth accelerated to 45% in 1QFY27, driven by ARVs, with established scale, strong order visibility and backward integration supporting growth. Moreover, Lenacapavir and expansion into non-ARV and broader semi-regulated markets offer incremental opportunities.
* Strong segmental growth and operating leverage should drive a CAGR of 15.2% in revenue, 22% in EBITDA and 26% in PAT over FY26-28E. We value Emcure at 28x 12-month forward earnings to arrive at a TP of INR2,330. The stock is trading at an attractive 21x 12-month forward P/E. Reiterate BUY
Emcure strengthens growth, outperforming IPM in Aug/Sep’26
* Emcure grew 19.3% YoY in Sep’26, outperforming IPM growth of 17.1% by 220bp, signaling a strengthening growth trajectory in the DF segment.
* This followed the 14.4% YoY growth in Aug’26 vs. IPM growth of 13.1%, marking a turnaround after more than 12 months of underperformance, during which the growth gap ranged from 0.1% to 10.5%.
* Therapy-level momentum strengthened in Sep’26, led by gynecology (+34.7%), anti-infectives (+25.9%), cardiac (+13.8%) and anti-diabetic (+16.4%), all outperforming their respective three-month growth rates. However, respiratory remained a key drag, declining 16.9% YoY.
* That said, key brands sustained strong momentum, led by Orofer-XT (+64.8%), Zostum (+51.8%), Orofer-FCM (+51.5%) and Clexane (+36.5%) in Sep’26, significantly outperforming their respective three-month growth rates.
* DF growth is driven by priority franchises and portfolio expansion, with FY26 revenue reaching INR40.3b and 1QFY27 growth of 10% to INR10.9b. Strategic partnerships with Novo Nordisk, Sanofi and Roche, alongside Zuventus’ transition into the acceleration phase and improved field-force
Canada growth driven by complex generics; RoW diversifies beyond ARVs
* Emcure’s Canada business grew 18.7% in FY26 to INR14.9b, followed by 25% YoY growth to INR4.3b in 1QFY27, driven by new launches, market-share gains and steady performance across hospital and retail channels.
* Emcure strengthened its market position through the Cutimed dermatology acquisition in Apr’26 and Mantra integration, emerging as one of the top-10 generic players in Canada and the largest Indian company by prescriptions.
* The growth pipeline comprises 50+ products, including eight near-term firstgeneric opportunities, with increasing focus on complex generics, injectables and differentiated therapies across CNS, anti-infectives and oncology.
* Emcure’s RoW business grew 22% in FY26 to INR18.4b and accelerated to 45% YoY growth in 1QFY27 to INR5.2b, primarily driven by ARVs, alongside healthy momentum in non-ARV products.
* The business benefits from established ARV scale, strong order visibility and backward integration, while new approvals and an expanding portfolio of complex injectables and biosimilars support non-ARV growth.
* Near-term opportunities include Lenacapavir injection and tablets, alongside expansion into broader RoW and semi-regulated markets to diversify beyond traditional African ARV markets.
Valuation and view
* We expect Emcure to deliver a revenue CAGR of 15.2% over FY26-28E, driven by stable growth across segments, with DF and international business projected to grow at a CAGR of 12.4% and 17.4%, respectively. Operating leverage and improving operational efficiencies are expected to drive EBITDA CAGR of 22% over the same period.
* We project PAT CAGR of 26% over FY26-28E. At 21x 12-month forward P/E, the stock offers an attractive entry point relative to its growth prospects. We value Emcure at 28x 12-month forward earnings to arrive at a TP of INR2,330. Reiterate BUY.
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
