Company Update : Piramal Pharma by Motilal Oswal Financial Services Ltd
Misses estimate
* Piramal Pharma’s (PPL) revenue was steady YoY at INR19.3b (our est: INR21.4b) for the quarter.
* The CDMO segment’s (52% of total sales) revenue declined 6% YoY to INR10b.
* The complex hospital generics segment’s (CHG; 33% of total sales) revenue was almost flat YoY at INR6.4b.
* The India consumer healthcare segment’s (ICH; 15% of total sales) revenue grew 14% YoY to INR3b.
* Gross margin contracted 130bp YoY to 64%.
* However, EBITDA margin contracted 500bp YoY to 5.5% (our est: 9.5%), largely due to lower operating leverage (employee costs/other expenses up 230/135bp as a % of sales).
* EBITDA declined 48% YoY to INR1.1b (our est: INR2b).
* Adj. loss came in at INR1b (our est: loss of INR0.8b) for the quarter vs a loss of INR890m in 1QFY25.
* While there are near-term challenges, management is confident of achieving its FY30 target of USD2b revenue, 25% EBITDA margin, and high teen ROCE.
Other highlights
* CDMO:
* Excluding the impact of destocking of one large on-patent commercial product, the CDMO business delivered mid-teen YoY growth in revenue in 1QFY26.
* The Nutrition Supplement and Generic API businesses delivered strong growth during the quarter, reflecting steady demand and operational efficiency.
* The USFDA inspection at the Aurora (Canada) API facility was successfully completed with zero observations.
* Construction has commenced for capacity expansion at the Lexington (US) site, which focuses on sterile injectables and will support the integrated ADC development and manufacturing program over the medium to long term.
* CHG:
* Intrathecal Therapy sales were lower in Q1FY26 due to the timing of shipments at the end of June; however, growth is expected to recover in Q2FY26.
* The company is taking steps to address supply constraints in its Injectable anesthesia and pain management segment, with benefits expected to materialize from FY2027 onwards.
* Neoatricon®1 was launched in select EU markets during Q1FY26, and additional launches are planned across more markets in Q2FY26. It is investing in Differentiated and Specialty Products, including 505(b)(2) applications, complex generics, differentiated generics, and branded products, to enable long-term growth.
* ICH:
* The company added seven new products and 31 new SKUs in FY25.
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