Suven Pharma gains 5% to hit record high; stock rallies 18% in three days

Shares of Suven Pharmaceuticals hit a record high of Rs 617 on rallying 5 per cent on the BSE in Thursday’s intra-day trade in otherwise subdued market. In comparison, at 10:41 am, the S&P BSE Sensex was down 0.13 per cent at 57,608 points. The shares of the company have surged 18 per cent in the last three days on expectations of strong earnings. 

In the past three months, Suven Pharma has outperformed the market by soaring 30 per cent, as against less than a per cent rise in the Sensex benchmark index.

The company is focused on the business of contract development and manufacturing operations (CDMO). Suven provides services to leading global life science and fine chemical majors including custom synthesis, process R&D, scale Up and Contract Manufacturing of intermediates, APIs and formulations.

For the October-December quarter (Q3FY22), Suven Pharma had posted 40 per cent year-on-year (YoY) growth in standalone profit after tax (PAT) of Rs 136.95 crore, on the back of strong operational performance.

Revenue grew 43 per cent YoY at Rs 401 crore, while Ebitda (earnings before interest, taxes, depreciation, and amortization) jumped 37 per cent YoY at Rs 195 crore. However, Ebitda margins contracted 159 bps to 46.1 per cent, while it improved 162 bps sequentially.

The company’s board, in its meeting held on February 8, 2022, had given its in-principle approval to evaluate the acquisition opportunity of Caper Pharma Pvt. Ltd, an SEZ unit in Hyderabad engaged in formulations. The company had said it will evaluate the proposal subject to financial, tax and legal due diligence to finalize the definitive agreements.

“Focus on research by global innovators has intensified post Covid & augurs well for pharma CRAMS operations, which remain a key growth driver. The company has announced a Rs 600 crore investment – in upgradation of facilities, absorbing new technology & moving its R&D – executable over a two to three-year horizon, benefits of which may be visible in the long run,” ICICI Securities had said in a result update.

In formulations business, 17 ANDAs have been filed, however proposed acquisition of OSD facility of Casper pharma and subsequent operational performance in ramping up this segment amid various challenges would be a key monitorable, the brokerage said.