Diwali Stock Pick : Senores Pharmaceuticals Ltd for Target Rs.832 by Bajaj Broking
Robust ANDA Approvals Driving Upcoming Launch - In the past 12 months, Senores has secured multiple important US FDA approvals, most notably for Metoprolol Tartrate and Hydrochlorothiazide Tablets and for Tramadol, which position it to capitalize on high-value formulations in the US market. The management anticipates a sequential ramp-up in the US revenue base beginning H2FY26, driven by these launches and additional pending approvals.
Monetization of Acquired ANDAs – The company recently acquired a basket of 14 approved ANDAs from Dr. Reddy’s Laboratories and complementary portfolios from other US-based sellers, significantly enlarging its US addressable market. Management guidance states that commercialization of these acquired products will commence in a phased manner starting H2FY26, offering potential upside to both revenue and market share as these assets are integrated and launched.
Enhanced Realizations from EM to Double Per Unit Economics – The Emerging Market (EM) segment, which contributed ∼30% of revenue in FY25, is undergoing a product portfolio shift towards more niche molecules and a change in its go-to-market strategy. This repositioning, including entering a wider network of distributors, is expected to lead to a doubling of revenue per unit realization, significantly driving both growth and improvement in the segment's overall profitability.
Capex Plans and Growth Investments – Company has advanced its US strategy through a series of focused capex initiatives designed to amplify growth. In early 2025, the company invested USD 1.99 million into its wholly-owned US subsidiary, Senores Pharmaceuticals Inc., via a rights issue. This targeted injection of capital supports both working capital needs and aligns with stated IPO objectives, directly financing the company’s expanding ANDA pipeline and intellectual property management. Simultaneously, Senores is executing a significant expansion of its Atlanta manufacturing facility, nearly doubling annual production capacity to 2 billion units. By installing a third and fourth oral solids manufacturing line—set to become operational in Q3FY26 and by year-end FY26, respectively—the company aims to address growing demand from its US pipeline and bolster contract manufacturing services. Sterile injectable capability will follow this phase in FY27, strategically broadening product offerings.
Driving Profitability Through Backward Integration – Senores is expanding its Active Pharmaceutical Ingredient (API) manufacturing capabilities in Gujarat, aiding backward integration for key products. This move is expected to support a margin expansion, with management guiding for improved fixed-cost absorption and an overall EBITDA margin expansion in the coming fiscal year, a key factor for bottomline growth
Valuation – Senores Pharmaceuticals’ robust USFDA-approved portfolio, strong ANDA approvals, and strategic acquisitions underpin significant growth. EM portfolio repositioning and expanded distribution are set to double per-unit realizations, while US capex and backward integration enhance margins. We value the company at ?832, based on a PE of 30x FY27E earnings, reflecting its high-quality pipeline and value-accretive growth catalysts
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