Piramal Pharma Shares Rise 2% Following USFDA EIR for Ahmedabad Facility

Piramal Pharma stock price soared by 2% in early trade on Monday, September 30, after the pharmaceutical company received an Establishment Inspection Report for its manufacturing facility located at Ahmedabad, India.

At 09:21 am IST, Piramal Pharma was quoted at ₹228.20, up ₹5.10, or 2.29%, on BSE. Foreign research firm Jefferies in its report increased the target price to ₹260 projecting a 20% upside.

The USFDA inspected the said facility with Zero Form - 483 observations and No Action Indicated (NAI) designation in July 2024. "The receipt of said EIR marks the formal closure of the inspection," the company said.

Consolidated net loss for Q1 FY25, however narrowed to ₹88.6 crore from ₹98.6 crore of the same period last year. Revenues from operations grew about 12% year-over-year to ₹1,951 crore. The consolidated revenues of Piramal Pharma stood at ₹8,171 crore ($987 million) for the year ended March 31, 2024.

Piramal Pharma share has seen a 52-week high at ₹244.10 and a 52-week low at ₹87.55 on 11 September, 2024, and 26 October, 2023, respectively. The stock currently operates at 8.6% lower than its 52-week high while it trades 154.83% higher than its 52-week low.

Piramal Pharma wants to almost double its turnover from the present $1 bn by 2030, primarily on account of the "strategically-positioned" position of its CDMO business and "high-growth" verticals, CHG (complex hospital generics) and consumer healthcare.

The company demerged from the Piramal Enterprises promoted by Ajay Piramal in 2022, and also got listed on the stock exchanges. During the last two years, the company has simplified its corporate structure, diversified the business model and pursued growth with sharper focus.

Piramal Pharma will double CDMO and CHG business revenues in the next five years to $1.2 bn and $600 mn respectively; 25% EBITDA margin is the objective, said chairperson Nandini Piramal

The consumer healthcare segment would touch double-digit EBITDA margins riding on power brands, e-commerce profitability, and omni-channel expansion to reach a revenue of $200mn (~US$120mn in FY24).

“We would invest in the new format of our legacy brands-Little's, Lacto Calamine, Polycrol and Tetmosol-for profitability and business growth,” said Nandini Piramal. Overall, CDMO contributes the lion's share. As much as 58% of the total revenue is contributed by CDMO, which is the fastest growing. "It's well-positioned to service both "East and West, minus the China option," she adds.

It will be a focus segment with tailwinds coming from the yet to be passed US Biosecure Act, besides benefiting from an India-based cost-efficient manufacturing infrastructure. With tailwinds coming in, the growth would be much faster, she said. The US Biosecure Act looks to restrict US companies from working with certain Chinese biotech companies. The company has already seen the pick up in RFPs worldwide for the last quarter or two.

Coming to its strategy, the company will continue to look at organic and inorganic expansion depending upon the financial performance, debt levels and the cash flow generation. The acquisitions will be based on differentiated capabilities which would offer synergies.

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PAT is likely to register exponential growth in the next five to six years, as finance cost is likely to come down and the effective tax rates are likely to be rationalised.