IGI Logo

Scalable Platform with Increasing Commercial Depth

We initiate coverage on Sai Life Sciences Ltd (SAI) with ‘BUY’ rating and TP of INR1,620/share. SAI has built an integrated CRDMO platform spanning discovery, development and manufacturing, with a proven track record of supporting complex pharma and biotech programs. It is well placed to benefit from the shift toward outsourcing in small molecules, given its integrated capabilities across discovery, development and manufacturing and strong process chemistry expertise. We see large-pharma engagements as the key near-term growth driver, with the discovery platform providing a steady funnel of projects that can move into development and subsequently commercial manufacturing. The deep late-stage and commercial pipelines should further support growth. Planned capex of INR11-13bn for FY27E and rising wallet share from existing customers provide additional upside.

We forecast revenue/EBITDA/PAT CAGR of ~21%/25%/26% over FY26–29E led by ~23% growth in CDMO services and ~16% in CRO. With a strong pipeline moving toward commercial supply and a scalable integrated model, we believe SAI offers one of the best growth profiles among listed Indian CRDMOs. At CMP, the stock is trading at ~29x EV/EBIDTA (Pre-INDAS) and ~48x P/E on Sept’28E. We value the company at 55x P/E on Sept’28E. We initiate coverage with ‘BUY’ rating and TP of INR1620/share.

Integrated CRDMO enables end-to-end molecule commercialisation:

SAI’s discovery– development–manufacturing platform supports lifecycle retention, higher wallet share and conversion into commercial supply; >90% revenue comes from repeat customers, with revenue per commercial drug to rise by FY28E. Large-pharma traction is strengthening, with ≥2 customers under discussion for integrated models in FY27E and dedicated FTE contracts supporting the late-phase/commercial pipeline; 6 late-phase molecules were added over the last 15 months. Revenue is expected to grow ~21% CAGR FY26-29E.

Deep pipeline to support CDMO growth:

SAI’s 33 commercial, 14 late-phase and 50+ advanced molecules, supported by biotech-to-pharma transfers, acquired molecules and FTEs, provide visibility into commercial revenue and future CDMO opportunities. Overall we expect ~23% revenue CAGR for CDMO business over FY26-29E.

Fast-growing, integrated Discovery business:

CRO discovery revenue grew 30% CAGR FY22-26, with >65% customers using integrated services, while large-pharma traction is strengthening through a converted long-term discovery partnership, a new chemistry CRO customer and a process-development FTE under negotiation. CRO also acts as key catalyst for CDMO business

Increasing focus on complex chemistry and next-gen modalities:

New modalities expand outsourcing opportunities: SAI is expanding beyond small molecules into peptides, XDCs/ADCs, oligonucleotides, PROTACs/TPDs, CGTs and lipids, while strengthening complex chemistry, HPAPIs and advanced process technologies. A dedicated peptide development lab is expected shortly for a top-tier pharma customer, with a greenfield Hyderabad peptide facility targeted for FY28E. SAI has also scaled a late-stage GMP intermediate using flow chemistry and is evaluating continuous extraction, distillation and crystallisation for commercial use. These capabilities should support higher-value programs such as GLP-1s, macrocyclic peptides and PDCs, as innovators seek specialised partners with broader technology capabilities.

Capacities are aligned with the growth pipeline:

Capacity expansion supports pipeline progression: SAI is expanding discovery and manufacturing infrastructure, with manufacturing capacity rising from 700kL to 1,150kL by FY27E; the first of two 225kL Bidar production blocks is expected to come on stream in H2/Q3FY27E. FY27E capex of INR11–13bn is being deployed across capacity, R&D and new-age modalities, providing headroom to scale molecules from clinical development to commercial production. Over the years company has been able to maintain 1.1-1.3x asset T/o. SAI is also entering formulations through partners to meet demand for integrated offerings spanning custom first-in-human APIs and drug products

Please refer disclaimer at Report
SEBI Registration number is INH000000933