Buy Senores Pharmaceuticals Ltd for the Target Rs.960 by Choice Broking Ltd
A Tariff-resilient Outlier in Indian Pharma’s Generic Sea
While the Pharma sector in India broadly faces tariff-related uncertainty, we believe SENORES is well-insulated owing to its FDA-approved Atlanta facility, which serves only regulated markets, such as the US and EU. Unlike peers reliant on India-based exports, SENORES’ US manufacturing footprint reduces tariff risk and enables participation in high-margin, high-barrier segments, such as controlled substances and government contracts. The company is also expanding into sterile injectables at its US site, diversifying beyond oral solids. In India, its formulation facility supplies to 40+ emerging markets. In our view, this geographic and regulatory differentiation makes SENORES a rare, high-quality play in the current generics landscape.
Beyond Generics: CGT-driven US Edge with a 300+ EM Product Pipeline
SENORES’ pipeline offers strong depth and differentiation vs Indian generic peers, with 70 ANDA approvals, 27 commercialised products, and 57 in development, ensuring sustained growth in regulated markets. Its high CGT (Complex Generic Therapy) focus—75% of eligible filings vs ~53% industry average—drives valuable 180-day exclusivity window. The company is also acquiring select ANDAs from players like Teva, Dr. Reddy’s, etc., further expanding its US portfolio and tapping a huge market opportunity. In emerging markets, it has filed 719 product applications across 40+ countries, with 308 approved and ~300 more expected in 15–18 months.
Limited-competition Launches set to Drive 50% Revenue Growth
We believe SENORES is entering a high-growth phase, with management guiding for ~50% revenue growth and 100% EBITDA and PAT expansion.
* Revenue Growth: Strong launches in high-growth, less competitive therapies with CGT-linked exclusivity position SENORES for market share gains. Whereas, long-term CDMO and US government contracts offer stable, recurring revenue and reduce pricing volatility.
* EBITDA and PAT Growth: With injectables capex nearing completion, the company is entering a monetisation phase, driving operating leverage and supporting PAT/EBITDA growth. Adopting a conservative approach, we model ~72% PAT growth in FY26E.
* Margin Expansion: We expect backward integration and improved fixed-cost absorption to support ~175bps EBITDA margin expansion in FY26E.
Investment View: We believe SENORES is poised for a growth phase, supported by its strong manufacturing base and a well-diversified product pipeline in key markets. This positions the company for robust financial performance, with Revenue/EBITDA/PAT expected to expand at a CAGR of 27.9%/36.7%/41.2% over FY25–28E. Given the long-term revenue visibility from strong contracts and ANDA acquisitions as well as pipeline launches, we value the company using a DCF approach (click here to view). We initiate coverage with a target price of INR 960, with a 37.8% upside and a BUY rating. This equates to an implied PE of 27x, in line with peers, and a PEG ratio of 0.63, further validating our valuation.
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