 "Piramal Pharma soars 13% on heavy volumes; up 42% in 2 weeks post Q2 show")
Shares of Piramal Pharma (PPL) hit a new peak of Rs 307.85, soaring 13 per cent on the BSE in Wednesday’s intra-day trade backed by heavy volumes on a healthy outlook. The stock surpassed its previous high of Rs 284.35 touched on November 1, 2024. At 12:35 pm; the stock was up 10 per cent at Rs 301.65, as compared to 0.93 per cent rise in the BSE Sensex. A combined 32.3 million shares representing 2.43 per cent of total equity of PPL changed hands on the NSE and BSE.
In the past two weeks, the stock of the drug company has zoomed 42 per cent on delivering better-than-expected operational performance for the second quarter of financial year 2024-25 (Q2FY25) fueled by superior traction in the Contract Development and Manufacturing Organization (CDMO) segment.
Motilal Oswal Financial Services has a ‘Buy’ rating on PPL with a target price of Rs 310 per share. With enhanced inquiries on the CDMO front at industry level in India, the brokerage firm believes PPL is well poised to benefit from its differentiated capabilities and capacities. Further, it is increasing its offerings in the Complex Hospital Generics (CHG) segment through an established global network.
According to ICRA, PPL is expected to witness a 10-12 per cent year-on-year (YoY) revenue growth in FY2025 with an expansion in earnings before interest, tax, depreciation and amortisation (Ebitda), led by increased order inflows, high share of integrated orders and increasing share of differentiated offerings in the CDMO segment as well as steady performance in the CHG and the ICH segments.
PPL has successfully maintained its track record of zero OAI from the USFDA since 2011, highlighting its strong commitment towards quality and compliance. To maintain a sustainable and consistent quality system throughout these facilities, the company has several internal policies to ensure site quality health, quality of raw materials and key starting materials, the rating agency said in its rationale.
Meanwhile, in Q2FY25, PPL posted profit after tax (PAT) of Rs 23 crore for Q2FY25 compared to Rs 5 crore in a year ago quarter. Revenue for the quarter under review grew 17 per cent YoY at Rs 2,242 crore as compared to Rs 1,911 crore in Q2FY24. The revenue growth was primarily driven by robust growth in CDMO business.
Ebitda jumped 28 per cent YoY at Rs 403 crore. The margin improved 200 bps to 18 per cent, driven by operating leverage, cost optimization initiatives and superior revenue mix.
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To sustain this growth momentum and to capitalize on rising demand for sterile fill-finish capabilities, Piramal Pharma announced a $80 million expansion plan at its Lexington facility which is expected to be completed by end FY27. In CHG business, the company is witnessing steady volume growth in Inhalation Anesthesia products in the US and Emerging Markets. In India Consumer Healthcare (ICH) business, the company said it continues to see a robust growth in power brands and e-commerce sales.
Over the long term, the management remains committed to achieving the company’s financial goals of $2 billion revenue with 25 per cent EBITDA margin and 1x net debt / EBITDA by FY30.