Piramal Pharma hits record high in weak market; surges 12% on heavy volumes

As many as 43.42 million equity shares, representing 3.3 per cent of total equity of the pharma company, had changed hands on the NSE till afternoon

Piramal Pharma share price today: Shares of Piramal Pharma (PPL) hit a record high of Rs 216.58, surging 12 per cent on the National Stock Exchange (NSE), in Wednesday's intraday amid heavy volumes. As many as 43.42 million equity shares, representing 3.3 per cent of total equity of the pharma company, had changed hands on the NSE till 01:58 PM. By comparison, the Nifty 50 was down 0.40 per cent at 25,178.

PPL, part of the Piramal Group, is a global pharmaceutical company providing end-to-end pharma solutions to its customers through its network of development and manufacturing facilities located in India, North America, and the UK/Europe.

 

PPL operates under three business verticals: Piramal Pharma Solutions (PPS) – An integrated contract development and manufacturing organisation (CDMO); Piramal Critical Care (PCC) – A complex hospital generics (CHG) business; and India Consumer Healthcare (ICH) – The business of selling over-the-counter healthcare and wellness products.

The company sees promising growth opportunities for all three business verticals and is strategically making investments to strengthen its capabilities and capacities, analysts said.

PPL is expected to see an improved performance across segments on the back of the addition of differentiated offerings and a favorable demand scenario in CDMO, new launches and expansion of reach in complex hospital generics (CHG), steady growth in power brands in ICP, and gradual reduction in financial leverage.

"The management is witnessing early signs of recovery in biotech funding on the back of increased customer visits/inquiries. The generic API business also saw a pick-up in demand. Favorable regulatory changes and supply-chain diversification should provide medium- to long-term growth opportunities in the CDMO segment," analysts at Motilal Oswal Financial Services had said in its Q1FY25 result update.

CARE Ratings have a positive outlook on PPL's bank facilities/instruments on expectations that the company’s CDMO segment will continue its growth trajectory in the coming quarters, resulting in increased capacity utilisation.

Sales from the CDMO segment increased to Rs 4,750 crore in FY24 from Rs 4,016 crore in FY23 considering increased commercial contracts. With around 34 per cent of development revenue from phase III molecules, there is a high probability of these transitioning to product registration and commercial production. This provides visibility and stability on sales increasing by 10-15 per cent in the near term and improvement in profit before interest, lease rentals, depreciation, and taxation (PBILDT) by 100-200 bps.

In the last 18 months, five of Piramal’s CDMO facilities --  Digwal (India), Pithampur (India), Riverview (US), Sellersville (US), and Lexington (US) -- contributing over half of CDMO revenues in FY24 successfully completed the USFDA inspections with zero observations and received an establishment inspection report (EIR) / Voluntary action indicated (VAI) status.

The company has already received an EIR for Riverview and Observations at Lexington have been classified as VAI. The company emphasised its commitment to upholding highest standards of compliance and affirmed its dedication to working closely with the FDA to address identified observations.

"As more molecules in the discovery and development phases reach commercialisation, revenue and capacity utilisation are expected to rise further in FY25 and FY26," CARE Ratings said.

Meanwhile, on July 29, 2024, HDFC Mutual Fund, through various of its schemes, had purchased an additional 27.28 million or 2.06 per cent stake of PPL via open market, according to disclosure made by the company. Post acquisition, HDFC Mutual Fund holding in PPL increased to 7.06 per cent from 5 per cent.