Add Solara Active Pharma Sciences, target price Rs 721: ICICI Securities

ICICI Securities has add call on Solara Active Pharma Sciences with a target price of Rs 721. The current market price of Solara Active Pharma Sciences is Rs 574.8.

Solara Active Pharma Sciences, incorporated in the year 2017, is a Small Cap company (having a market cap of Rs 2105.78 Crore) operating in Pharmaceuticals sector.

Solara Active Pharma Sciences key Products/Revenue Segments include Active Pharma Ingredients, Other Operating Revenue and Sale of services for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company has reported a Consolidated Total Income of Rs 366.89 crore, up 249.19% from last quarter Total Income of Rs 105.07 crore and down -19.19% from last year same quarter. Company has reported net profit after tax of Rs 1.81 crore in latest quarter.

Investment Rationale
Solara Active Pharma (Solara) has reported better-than-estimated result in Q4FY22 led by business recovery, which achieved ~90% of normalised revenue. Revenue, EBITDA and PAT declined ~19%, ~86% and ~97%, respectively, on a YoY basis. However, sequentially, revenue grew ~260% on an impacted base of Q3FY22 which was on account of inventory adjustment. Solara announced withdrawal of merger with Aurore due to subdued performance of both the entities.

While the brokerage believes near-term performance would remain under pressure due to business volatility, cost inflation and withdrawal of Aurore merger, sharp correction in stock (down 34% from Q3 result and 49% in last 6 months) has priced in most concerns. Recovery in business, normalising of high costs and use of own front-end bode well for growth and profitability over the long term.

Promoter/FII Holdings
Promoters held 39.71 per cent stake in the company as of 31-Mar-2022, while FIIs owned 19.42 per cent, DIIs 3.64 per cent.