I-Sec initiates coverage on Suven Pharmaceuticals with a Buy rating, target price Rs 1,400

ICICI Securities has initiated a coverage on Suven Pharmaceuticals with a buy call and a target price of Rs 1,400. The current market price of Suven Pharmaceuticals is Rs 1112.05. Suven Pharma, incorporated in 2018, is a Small Cap company with a market cap of Rs 28754.38 crore, operating in the Pharmaceuticals sector.

Suven Pharmaceuticals' key products/revenue segments include Pharmaceuticals, Sale of services, Duty Drawback and Other Operating Revenue for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 322.86 crore, up 18.77% from last quarter Total Income of Rs 271.84 crore and up 37.88% from last year same quarter Total Income of Rs 234.16 crore. The company has reported net profit after tax of Rs 83.29 crore in the latest quarter.

The company's top management includes Mr.Annaswamy Vaidheesh, Dr.V Prasada Raju, Mr.Pankaj Patwari, Ms.Shweta Jalan, Ms.Matangi Gowrishankar, Mr.Vinod Rao, Mr.K G Ananthakrishnan, Mr.Pravin Rao Udhyavara Bhadya. Company has Karvy & Co. as its auditors. As on 31-12-2024, the company has a total of 25 Crore shares outstanding.

Investment Rationale
ICICI Securities expects Suven Pharmaceuticals to register 18.8%/22%/21% revenue/EBITDA/PAT growth over FY24?27E. The company is also likely to generate free cash flow of INR 18.3bn over FY25?27E, which should help meet its organic initiatives. RoE is likely to improve from 16.9% in FY24 to 18.6% in FY27E. At CMP, the stock trades at 50.4x FY27E earnings and 31.5x EV/EBITDA. The brokerage values the company on a DCF basis, which they believe would help capture the long-term potential of this business. I-Sec initiates coverage on the stock with a BUY rating and a target price of Rs 1,400 (upside of ~19%). The key downside risks are slowdown in global R&D; loss of patent of commercial products may dent performance; delay in integration and synergies of the acquired assets and geopolitical uncertainties.

Promoter/FII Holdings
Promoters held 50.1 per cent stake in the company as of 31-Dec-2024, while FIIs owned 10.84 per cent, DIIs 16.67 per cent.