Suven Pharmaceuticals - Q1FY21 Company Update - ICICI Securities

Q1FY21 revenues grew 20.7% YoY to Rs. 238 crore driven by 39% YoY growth in the pharma segment to Rs. 127.6 crore. Specialty chemical sales came in at Rs. 97 crore vs. ~Rs. 99 crore in Q1FY20. EBITDA for the quarter was at Rs. 112 crore, up 9.4% YoY. EBITDA margins contracted 486 bps YoY to 47.0% due to lower gross margin performance, partially offset by lower personnel and other expenditure. PAT remained flat YoY at Rs. 91.5 crore (vs. Rs. 91.9 crore in Q1FY20). Delta vis-a-vis EBITDA was due to lower profit share from associates and a higher tax rate.

Valuation & Outlook

Post de-merger from Suven Life Sciences, pharma business will be largely driven by two cash cow CRAMS segments i.e. pharma, speciality chemicals. With a strong margin profile (+40%) without the R&D burden of innovative pipeline, the free cash flow is likely to remain strong. Despite pandemic and high base, the company has guided 10-15% growth based on strong order book position (albeit some expected delays). Despite significant run up, there is still scope for upside as the company is still trading at significant discount to some leading players in the space dealing with innovators. We emphasise the strong execution capability and focused approach without the burden of success/failure of the innovative pipeline. We maintain BUY rating with a target price of Rs. 770 based on 22x on FY22 EPS of Rs. 35.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_SuvenPharma_CoUpdate_Aug20.pdf

Shares of SUVEN Pharmaceuticals LTD. was last trading in BSE at Rs. 676.30 as compared to the previous close of Rs. 652.30. The total number of shares traded during the day was 17064 and the deliverable quantity was 7553 shares.

The stock hit an intraday high of Rs. 680.55 and intraday low of Rs. 657.35.

Source : Equity Bulls

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