Buy Senores Pharma Ltd For Target Rs.1,795 by Choice Institutional Equities Ltd
Product and Market Expansion Reinforce Growth Visibility
We continue to maintain a positive stance on the company, supported by both, product and market expansion. With ~35 approved ANDAs in the US and over 500 approved products across Emerging Markets, planned for launch in 18–20 months, we expect the company to sustain its growth trajectory, delivering a revenue CAGR of 35% in the next three years, in line with the management's guidance. We also anticipate EBITDA margin to remain healthy at 28–29% in FY27E and FY28E. In addition, the successful scale-up of the Apnar acquisition, coupled with ongoing capacity expansion at the US facility, reinforces our confidence in the company's long-term growth strategy. Accordingly, we revise our FY27E/FY28E estimate upwards by 4.9%/10.3%. We continue to value the stock at 35x FY28E EPS, resulting in a revised TP of INR 1,795, while maintaining our ‘BUY’ rating. The implied PEG ratio of 0.9x further supports our constructive valuation outlook
Healthy Revenue Momentum; Margin Expansion Continues
* Revenue grew 35.9% YoY / 2.9% QoQ to INR 1,802 Mn (vs. CIE estimate: INR 1,960 Mn).
* EBITDA grew 87.1% YoY / 13.2% QoQ to INR 538 Mn (vs. CIE estimate: INR 533 Mn); margin expanded 815 bps YoY / 272 bps QoQ to 29.8% (vs. CIE estimate: 27.2%).
* PAT increased 55.6% YoY but declined 2.8% QoQ to INR 307 Mn (vs. CIE estimate: INR 276 Mn).
Pipeline Execution Supports 32% CAGR over FY26-29E
The company continued to deliver strong growth in this quarter, reinforcing our confidence in its execution capabilities. We anticipate this momentum to sustain, translating into a revenue CAGR of 32% in the next three years. We believe this will be supported by continued traction across both regulated and emerging markets.
* Regulated Markets: We expect regulated markets to remain the primary growth driver, supported by the launch of 35 approved products over the next 18-20 months. Growth will also be aided by multiple commercialisation channels, including Zoraya, Amerisyn, B2B out-licensing of ANDAs and CDMO/CMO manufacturing. In addition, capacity utilisation at the Apnar facility continues to improve in line with expectation, while the ongoing US capex should further support growth.
* Emerging Markets: The company has received approvals for over 500 products, which we expect to make a meaningful revenue contribution over the next two years. In addition, the anticipated PIC/S certification for the Chhatral facility should provide access to additional mid-tier regulated markets. Margin has also improved to the high teens, while the business has turned cash flow-positive, providing further support to the growth outlook.
Business Mix to Drive 28–29% EBITDA Margin EBITDA margin
continued to expand in this quarter and we expect this trend to sustain, supported by a more favourable product mix and improved capacity utilisation. Accordingly, we forecast EBITDA margin in the range of 28–29% across FY27E–FY28E.
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SEBI Registration no.: INZ 000160131
