JM Financial initiates coverage on OneSource Specialty Pharma with a Buy call, target price Rs 2,049

JM Financial has initiated coverage on OneSource Specialty Pharma with a Buy call at a target price of Rs 2,049. The current market price of OneSource Specialty Pharma is Rs 1623.5. The time period given by the analyst is a year when OneSource Specialty Pharma price can reach the defined target.

Financials

Following the strategic consolidation of Stelis, SteriScience, and Strides' softgel businesses into a single entity in Sep'23, OneSource has emerged as one of India's most uniquely positioned CDMOs. OneSource's DDC business is set to benefit disproportionately from the surge in generic GLP-1 demand, with commercialisation beginning in 1QFY26. The DDC business is expected to generate Rs 11.6 billion in FY27, 7x of FY24 sales, with the momentum likely to continue post FY27 too. Beyond GLP-1s, the company has built strong footholds in softgel oral formulations, sterile injectables, and biologics. Each vertical is expected to deliver strong double-digits growth, led by capacity additions and new customer-wins. The company has robust infrastructure (5 globally approved sites), experienced management, early mover advantage in GLP-1 CDMO, and aggressive capex plans (USD100mn over the next 4 years).


Investment Rationale
JM Financial expects Onesource to be the fastest growing CDMO over FY25-27 amongst the listed peers. We project Revenue/EBITDA/APAT CAGR of 35%/52%/129% over FY25E-27E, led by strong GLP-1 product sales ramp-up. In their view, GLP-1 DDC has high EBITDA margins of ~50%, thus improving Adj. RoIC to 38% by FY27. We value One Source at 22x EV/EB multiple on Mar'27 EBITDA to arrive at a Target price of Rs 2,049/share. (This target price doesn't factor in ~Rs 270/share option value arising out of gSemaglutide US filing.) The brokerage has initiated coverage with a BUY.

Promoter/FII Holdings
Promoters held 34.25 per cent stake in the company as of 31-Mar-2025, while FIIs owned 18.54 per cent, DIIs 17.9 per cent.