Buy Suven Life Sciences, target Rs 270: Emkay Global Financial Services

Emkay Global Financial Services has a buy call on Suven Life Sciences Ltd. with a target price of Rs 270. The current market price of Suven Life Sciences Ltd. is Rs 233.65. Time period given by the brokerage is a year when Suven Life Sciences Ltd. price can reach defined target. Suven Life Sciences Ltd., incorporated in 1989, is a midcap company with a market cap of Rs 2937.04 crore.

Investment rationale by Emkay Global

 Suven Life Sciences (SVLS) is a compelling play on the recovery being witnessed in global R&D spending, as reflected in strong fund raising by biotech start-ups as well as a fastgrowing research pipeline across multiple stages of clinical trials.


 Also, the global Clinical Development & Manufacturing Organizations (CDMO) industry has undergone significant consolidation, both at the Clinical Research Organizations (CRO) level as well as at the API manufacturing level. As a result, fewer and only niche players are left in both clinical services and API manufacturing.

 SVLS enjoys a strong margin profile with EBITDA margin of 30%+. Earnings CAGR over FY18-20E is estimated at 19% and ROIC of 28%. We initiate coverage on SVLS with aTarget Price (TP) of Rs270, valuing the company at 22x FY20E EPS of Rs 12.1 Investment rationale by Edelweiss.