Reduce Piramal Pharma Ltd for the Target Rs. 170 by Choice Institutional Equities
Key Conference Call Highlights
Contract Development and Manufacturing Organisation (CDMO)
* Strong recovery in H2 with improving RFPs and order inflows, supported by recovery in biopharma funding; win rates improved meaningfully as compared to the previous year.
* Increasing RFPs for differentiated capabilities (ADCs, sterile fillfinish, on-patent manufacturing), with strong preference for North American facilities.
* USD 90Mn Lexington and Riverview exp ansion on track. Riverview already complete and serving customers; Lexington targeting completion by end of CY2027.
* Destocked on-patent molecule remains an overhang; no nearterm orders anticipated; excluded from FY27 guidance.
* ADC revenues at ~USD 64 Mn in FY26; new customer additions signals meaningful growth ahead in FY27 and beyond.
Complex Hospital Generics (CHG)
* Kenalog acquisition complete; revenue contribution expected from Q2 FY27; limited competition despite 30+ years off-patent.
* Inhalation anesthesia leadership sustained (~47% market share); ramp-up expected in ex-US markets.
* Digwal facility now supplying ex-US markets (the UAE, Cambodia, Kenya, Sri Lanka); Bangladesh, Brazil, Malaysia next in line; lower cost base to drive competitiveness.
* Injectable pain management supply constraints persists; resolution underway with suppliers.
India Consumer Healthcare (ICH)
* Strong growth driven by Power Brands (20%+ growth); contribution continues to increase.
* E-commerce scaling up rapidly, now a meaningful share of sales.
* Marketing spend maintained at ~12% of sales, with sharper digital and media mix optimisation.
* Strategy sharpened around premiumisation — fewer but higherimpact product launches; 31 new products/SKUs in FY26 vs 50+ in previous years.
Outlook
* FY27 guidance: early-to-mid teens revenue growth; EBITDA and PAT expected to grow faster, supported by operating leverage.
* Revenue profile expected to be H2-weighted, consistent with historical CDMO delivery patterns; growth momentum to build from Q2.
* Middle East situation remains fluid — cost escalations expected across sourcing, logistics and working capital; mitigation measures activated including passing on cost pressure wherever contractual structures permit.
* Tariffs seen as a nil effect — US and UK sites exempt; onshoring trend accelerating customer interest at North America and European facilities.
* Net debt to EBITDA to remain range-bound at ~3.6x through FY27 given ongoing Lexington capex; long-term target is ~1x.
* FY27 capex guided at USD 120–135 Mn, largely towards Lexington expansion; excludes Kenalog acquisition and any future in-licensing deals.
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