25 September 2024

Company Update | Healthcare

Piramal Pharma
BSE SENSEX S&P CNX
84,914 25,940 CMP: INR218 TP: INR260 (+19%) Buy
Geared to drive robust operating leverage across segments
We met Piramal Pharma (PIRPHARM) management to understand the company’s
business outlook.
Stock Info  PIRPHARM is well-positioned to offer differentiated services at the product
Bloomberg PIRPHARM IN development and commercial manufacturing stage in the CDMO segment.
Equity Shares (m) 1326 Industry tailwinds, such as the US Biosecure Act, should further boost business
M.Cap.(INRb)/(USDb) 288.6 / 3.4 prospects in this segment.
52-Week Range (INR) 244 / 88  With its established presence in complex hospital generic (CHG) products (like
1, 6, 12 Rel. Per (%) 12/62/90
Sevoflurane and baclofen), PIRPHARM can grow this business by adding more
12M Avg Val (INR M) 1071
Free float (%) 65.1 products, expanding into new markets and gaining market share in the existing
markets.
Financials Snapshot (INR b)
 A focused approach to power brands and an enhanced distribution network
Y/E MARCH FY25E FY26E FY27E
Sales 93.3 107.4 124.9
should drive better profitability for its India consumer health (ICH) segment.
EBITDA 15.1 20.2 24.9  We maintain our BUY rating on PIRPHARM with a TP of INR260, based on SOTP
Adj. PAT 3.4 7.1 10.4 (17x EV/EBITDA for CDMO business; 13x EV/EBITDA for CHG and India
EBIT Margin (%) 8.1 11.5 13.3 consumer health business).
Cons. Adj. EPS (INR) 2.6 5.3 7.8
EPS Gr. (%) 509.3 107.2 46.6 CDMO: Improved utilization, enhanced offerings to improve
BV/Sh. (INR) 69.2 75.1 83.8 prospects
Ratios
 PIRPHARMA has been increasingly focusing on (i) innovation-related work
Net D:E 0.5 0.4 0.4
RoE (%) 4.2 8.2 10.9 (50% of CDMO revenue), (ii) differentiated offerings with lower competition
RoCE (%) 4.0 6.6 8.4 and higher margins, and (iii) securing more integrated orders with higher
Payout (%) 17.6 17.6 17.6 value proposition.
Valuations
 The company has significantly invested in new differentiated capabilities,
P/E (x) 83.7 40.4 27.6
EV/EBITDA (x) 21.8 16.1 13.0 e.g., ADCs, HPAPI, on-patent API, mAbs and Peptides. It is also investing in
Div. Yield (%) 0.2 0.4 0.5 capacity expansion and debottlenecking of the existing plant.
FCF Yield (%) 0.0 0.0 0.0  Additionally, it has a strong pipeline of 151 molecules under various stages
EV/Sales (x) 3.5 3.0 2.6
of development. PIRPHARMA has witnessed a 3x jump in the development
Shareholding pattern (%) pipeline since FY17.
As On Jun-24 Mar-24 Jun-23  Revenue from the on-patent molecule doubled YoY to USD116m in FY24.
Promoter 35.0 35.0 34.8
With a large number of molecules in phase-3 development, PIRPHARMA
DII 13.0 12.1 5.5
FII 31.9 31.0 35.4 should witness a rise in commercial CDMO contracts from these molecules
Others 20.2 21.9 24.3 going forward.
FII Includes depository receipts  Revenue from differentiated offerings clocked a CAGR of 22% over FY21-24
Stock performance (one-year) to USD253m and their revenue share in total CDMO revenue increased to
44% in FY24 from 27% in FY21.
Piramal Pharma
Nifty - Rebased
 By 2030, the company targets USD1.2b of total CDMO revenues with
290 ~25% EBITDA margins.
230 CHG: Efforts under way to build pipeline, expand reach
170  PIRPHARMA reported a 10% CAGR over FY16-24 in CHG business, led by a
110 strong brand recall and well-established infrastructure.
 Given the strong presence of Inhalation Anesthesia (IA), especially
50
Sevoflurane in the developed markets like the US and EU, PIRPHARM
Jul-24
Nov-23

May-24
Sep-23

Jan-24

Mar-24

Sep-24

plans to expand in the ROW market.

Tushar Manudhane - Research Analyst (Tushar.Manudhane@MotilalOswal.com)

13 August
Research 2020- Akash Manish Dobhada (Akash.Dobhada@MotilalOswal.com | Viraj Shah (Viraj.Shah@MotilalOswal.com)
Analyst 1
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Piramal Pharma

 For the expansion, the company is investing in additional lines at Digwal and
Dahej facilities to manufacture Sevoflurane. These lines would be vertically
integrated lines.
 Moreover, with a strong brand franchise in Intrathecal and Pain management,
PIRPHARM is further investing in new differentiated products and has a pipeline
of 24 drugs with a market size of USD2.2b.
 The company aims to deliver a 15% CAGR to USD600m and EBITDA margin of
25%+ over FY25-30.

ICP: Extensive marketing/distribution to better brand recall

 PIRPHARMA targets a CAGR of 26% in ICH revenue over FY24-FY30 to
USD200m, driven by a scale-up in power brands, omni-channel expansion, new
product launches in e-commerce, and leveraging automation.
 In the past three years, the company has launched 150+ new products and SKUs
and has spent 13-16% of its ICH revenues on media and trade promotion, which
resulted in a 29% CAGR in its power brands. However, it expects to reduce
promotional expenses gradually.
 The company targets to build power brands with profitability of INR1b to INR5b
(Little’s, Lacto Calamine, Polycrol, Tetmosol, i-range and CIR).
 The e-commerce channel (20% of ICH revenue) grew 58% over past three years.
PIRPHARMA has a presence on 20 e-commerce platforms, has its own D2C
platform and has a strong presence across retail and trade stores.
 The ICH business clocked a strong 19% CAGR over FY18-24 to USD118m, led by a
strong brand recall, new launches and leveraging alternate channels.
 PIRPHARMA plans to utilize omni-channel expansion to increase footprints in
rural markets, build coverage in top-weighted outlets in the existing towns and
maximize distribution across modern trade outlets.

Valuation and view

 We expect PIRPHARMA to deliver a CAGR of 16%/28%/74% in revenue/EBITDA/
PAT over FY25-27, aided by a healthy order inflow in CDMO, the expansion of its
IA portfolio in the ROW market, and new launches and increasing reach of
power brands. A decline in interest expenses could also improve profitability.
 We maintain our BUY rating on PIRPHARM with a TP of INR260, based on SOTP
(17x EV/EBITDA for CDMO business; 13x EV/EBITDA for CHG and India consumer
health business). We expect the performance to scale up further for all three
segments with better operating leverage over the next 2-3 years.

25 September 2024 2
 Piramal Pharma

Exhibit 1: Valuation snapshot

MCap EPS (INR) EPS Gr. YoY (%) PE (x) EV/EBITDA (x) ROE (%)
Company Reco
(USD B) FY24 FY25E FY26E FY25E FY26E FY25E FY26E FY25E FY26E FY24 FY25E FY26E
Ajanta Pharma Buy 4.7 62.3 75.8 88.1 21.7 16.0 40.9 35.2 29.0 25.1 22.7 24.5 23.8
Alembic Pharma Neutral 2.6 31.5 37.6 41.5 19.7 10.3 31.0 28.1 18.8 16.8 13.5 14.3 13.9
Alkem Lab Neutral 8.6 159.7 178.1 202.9 11.6 13.9 33.6 29.5 28.6 24.8 19.7 19.1 18.8
Aurobindo Pharma Neutral 10.4 56.0 66.3 73.8 18.3 11.3 22.3 20.1 11.8 10.8 11.6 12.3 12.2
Biocon Neutral 5.3 1.8 5.0 10.4 180.0 106.1 73.4 35.6 16.5 12.8 1.1 3.0 5.9
Cipla Buy 16.0 52.5 58.7 65.6 11.9 11.7 28.2 25.3 18.4 16.1 15.9 15.4 14.9
Divi's Lab. Neutral 17.1 60.0 77.7 95.1 29.6 22.4 69.1 56.5 48.5 40.4 12.1 14.4 15.9
Dr Reddy's Labs Neutral 13.3 317.1 353.8 389.0 11.6 9.9 18.8 17.1 11.1 9.3 20.7 19.1 17.7
Eris Lifescience Neutral 2.2 29.2 30.4 42.0 4.0 38.0 43.5 31.5 16.8 14.6 16.8 15.2 18.2
Gland Pharma Buy 3.6 47.6 56.1 67.8 17.8 20.9 32.9 27.2 18.5 15.4 9.4 10.1 10.9
Glenmark Pharma Buy 5.8 2.5 47.5 59.2 1812.8 24.6 36.0 28.9 18.9 15.7 0.8 15.8 16.8
Glaxosmit Pharma Neutral 5.5 43.3 47.3 51.5 9.2 8.9 57.6 52.9 43.1 39.1 41.3 38.0 34.7
Granules India Buy 1.6 17.4 24.0 31.9 38.5 32.5 23.3 17.6 13.3 10.8 13.9 16.6 18.6
Ipca Labs. Neutral 4.4 20.8 33.5 44.4 61.3 32.6 43.4 32.8 22.9 19.2 8.7 12.7 15.0
Laurus Labs Buy 3.0 3.0 7.2 12.9 139.9 78.2 65.5 36.8 24.5 18.6 4.0 9.1 14.7
Lupin Neutral 11.8 41.5 59.2 69.9 42.4 18.2 36.9 31.2 21.6 18.2 14.1 17.3 17.4
Mankind Pharma Buy 12.7 47.8 54.5 62.4 14.1 14.6 48.7 42.5 34.3 29.2 22.8 21.4 20.9
Piramal Pharma Buy 3.5 0.4 2.5 5.1 497.1 103.1 87.6 43.1 22.3 16.9 0.8 4.1 7.9
Sun Pharma.Inds. Buy 53.5 41.4 49.3 58.4 19.1 18.4 37.7 31.9 30.0 25.5 16.7 17.3 17.6
Torrent Pharma. Neutral 14.0 47.1 63.4 82.0 34.6 29.3 54.5 42.2 29.3 24.5 24.4 28.5 30.5
Zydus LifeScience Neutral 12.7 37.6 43.9 47.3 16.5 7.9 24.1 22.3 15.9 14.3 20.3 19.6 17.4
Source: MOFSL, Company

25 September 2024 3
 Piramal Pharma

About 50% of CDMO revenue CDMO: Improved utilization, enhancing offerings to

comes from innovation in FY24
improve business prospects
 PIRPHARMA delivered an 11% CAGR over FY18-24. In FY24, PIRPHARMA posted 18%
YoY growth, led by strong order inflows and improved execution.
 PIRPHARMA has invested significantly in differentiated capabilities and capacities, as
well as in debottlenecking its facilities.
 Integrated manufacturing and complex processes position PIRPHARMA well to secure
new contracts.
 A recovery in biotech funding and regulatory changes (the US Biosecure Act) would lead
to better order inflows from emerging biotech companies.
 Accordingly, we expect 17% CAGR over FY25-27.

Operating leverage led profitability growth

 PIRPHARMA delivered an 11% CAGR over FY18-24. In FY24, PIRPHARMA posted
18% YoY growth, led by strong order inflows and improved execution.
 Over the past five quarters, PIRPHARMA's CDMO EBITDA margins have
benefited from a superior revenue mix, process efficiency, higher utilization, and
operating leverage, resulting in company’s EBITDA growth outpacing revenue
growth.
 PIRPHARMA has been increasingly focusing on (i) Innovation related work (50%
of CDMO revenue), (ii) Differentiated offerings with lower competition and
higher margins, and (iii) Securing more integrated orders with higher value
proposition.
34% revenue from phase I and
Phase III clinical development Exhibit 2: Strong Operating leverage supported higher profitability growth
each
Revenue Growth (%) EBITDA Growth (%)
92 94

50 48
31

18 11 14 18 12

1QFY24 2QFY24 3QFY24 1QFY24 1QFY25

Source: MOFSL, Company

Innovation-focused integrated CDMO

 PIRPHARMA’s CDMO business derives ~50% of revenue from innovation-related
work, of which discovery services/development services/on-patent commercial
manufacturing contribute 4%/26%/20%.
 Development Services (26% of revenue): PIRPHARMA has development
capabilities ranging from ADC, peptides, HP API, hormones, etc. across
Phase I to Phase III. As of FY24, the company’s pipeline stood at 150+
projects (vs 52 projects in FY17) across multiple phases.
 On-Patent Commercial Manufacturing (20% of revenue): Revenue from
the on-patent molecule doubled YoY to USD116m in FY24 due to an
increase in order inflows for on-patent molecules. With a large number of

25 September 2024 4
 Piramal Pharma

molecules in phase-3 development, PIRPHARMA should witness a rise in

commercial CDMO contracts from these molecules going forward.
 Discovery Services (4% of revenue): The company, with a team of 300+
scientists, supports a diverse set of customers. PIRPHARMA has forward
integration with its Global API and formulation sites in discovery services.

Exhibit 3: 3x jump in molecules under development since FY17

Pre-clinical Phase-I Pase-II Phase-III

33

38
10
21 68
3 18
12
FY17 FY24
Source: MOFSL, Company

 In FY24, the company had 151 molecules at various stages of development. The
number of molecules in Phase III has increased approximately threefold over the
past seven years. Upon commercialization, these could lead to commercial
manufacturing contracts, driving growth.
 Going ahead, the company plans to focus its investments towards ADC,
peptides, and on-patent API development & manufacturing.

Investment in differentiated offering/capacity expansion to drive growth

 PIRPHARMA has invested significantly in differentiated capabilities and
capacities, as well as in debottlenecking its facilities.
 Over a period of three years, contribution from differentiated offerings grew
from 27% in FY21 to 44% in FY24.
 On the back of technical complexity, high entry barriers, lower competition and
superior profit margins, revenue from differentiated offerings grew at a CAGR of
22% over FY21-FY24 to USD253m.

Exhibit 4: Fully integrated ADC services

Source: MOFSL, Company

25 September 2024 5
 Piramal Pharma

Improved Utilization and increased scale of operations to bolster growth

 PIRPHARMA’s plans to double its CDMO business (58% of total sales) to $1.2b by
FY30 with ~25% EBITDA margins on the back of improved network utilization
and capturing high growth opportunities going ahead.
 Key levers for growth are (i) increasing volumes in low-moderate utilized sites,
(ii) improved biotech funding, (iii) new order wins, and (iv) increasing scale of
operations for differentiated services.

Exhibit 5: Customer led investments in capabilities and capacities

Source: MOFSL, Company

 With a revival in biotech funding, investment in new capabilities and

debottlenecking at the existing facility, PIRPHARMA is witnessing new order
inflows.
 A sound compliance track record, wide-spread manufacturing facilities, de-
risking the manufacturing and development process due to geopolitical issues,
and the implementation of the US Biotech Secure Act would aid growth further.
 Accordingly we expect that the CDMO business to clock 17% CAGR over FY25-
27.

25 September 2024 6
 Piramal Pharma

About 67% of CHG revenue CHG: Efforts under way to build pipeline, expand reach
comes from Inhalation
Anesthesia in FY24  PIRPHARMA reported 10% CAGR over FY16-24 in CHG business, led by strong brand
recall and well established infrastructure.
 Given that the company has a strong presence in the US and EU markets in
Sevoflurane, it is investing in vertically integrated capacities for new markets.
 Further, it has 24 drugs under various stages of development with a market size of
USD2b, which would drive growth over the medium term.
 Accordingly, we expect a 13% sales CAGR during FY24-26.

Vertically integrating and capturing the demand in ROW markets

 PIRPHARMA generates ~67% revenue from the segment. In IA, sevoflurane
being 85% of the IA market globally, it is preferred most in IA drugs, given its
potent, rapid action, lesser GHG emissions, and faster emergence and recovery.
 PIRPHARMA, being one of the key players in supplying sevoflurane (43% market
share), continues to benefit from the transition to sevoflurane from desoflurane
in developed markets.
 Additionally, it plans to expand the IA business in ROW markets in FY25.
 For this, the company is setting up new vertically integrated manufacturing line
in Digwal for Sevoflurane and KSM capacity in Dahej. This would lead to better
US has highest contribution of cost control and supply chain efficiencies and cater to the rising demand.
~51% in CHG segment
 It is expected that these facilities will start commercial operation in FY25. This
would have some impact on the margins of the company in the near term.
 However, these projects would drive growth over the medium term.

Building generic/specialty pipeline

 PIRPHARM generates ~15% of CHG revenue from the Intrathecal therapy. Being
a leading player, the company has 70% market share in Baclofen in the US, aided
by its extensive distribution network and detailed understanding of tender
market operations.
 Further, in Pain management (10% of CHG business), the company has strong
brand recall in Japan, France, Indonesia, South Africa, and Saudi Arabia and has
extensive presence in 50+ countries through own field force and strategic
partnerships.

Exhibit 6: Strong pipeline with addressable market size of USD2.2b

Source: MOFSL, Company

25 September 2024 7
 Piramal Pharma

 Given the strong presence in key therapies like IA, intrathecal and Pain, the
company plans to launch new products in the US and EU markets with high
entry barriers. It has 24 injectable products under the pipeline with a market
size of USD2.2b, which would aid growth over the medium term.

New launches/expansion in newer geographies to drive growth

 PIRPHARMA has witnessed a steady 10% revenue CAGR over FY16-24 to
~USD300m and EBITDA margin of over 25%, led by a strong brand recall, a well-
established manufacturing and distribution infrastructure, and strong relations
with hospitals and GPOs.

Exhibit 7: CHG sales to clock 13% CAGR over FY24-26

Complex Hospital generics sales (INRb)

14 17 19 17 20 23 25 27 31 35
FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
Source: MOFSL, Company

 PIRPHARMA aspires to achieve the revenue target of USD600b and EBITDA

margin of 25%+ by FY30. This would be driven by a) maintaining the market
share position in the IA/intrathecal/pain management, b) expanding the
geographical presence, c) offering differentiated products in the specialty
portfolio, and d) cost optimization.
 Accordingly, we estimate 13% CAGR over FY25-27 to INR35b.

25 September 2024 8
 Piramal Pharma

ICH: Extensive marketing/distribution to better brand

recall
 The ICH business clocked a strong 19% CAGR over FY18-24.
 In FY24, PIRPHARMA posted double-digit growth, led by strong brand recall, new
launches and leveraging alternate channels, offset by seasonality effects.
 To enhance its presence, the company is launching new brands, investing in brand
promotion and increasing its reach to more towns and cities through alternate
channels.
 Accordingly, we expect 13% CAGR over FY25-27.

45% of FY24 revenue comes

Investment in brand promotion/marketing, new launches to drive growth
from the power brands
 PIRPHARMA targets ICH revenue CAGR of 26% over FY24-FY30 to USD200m
driven by (i) Scale up of power brands (ii) Omni-channel expansion (iii) New
product launches in e-commerce and (iv) Leveraging technological automation.
 PIRPHARMA generates 45% of ICH sales from power brands (as of FY24) and it is
continuously investing in media and trade spends to drive growth in Power
brands.
 Power brands include Little’s, Lacto Calamine, Polycrol, Tetmosol, i-range and
CIR. The company plans to build INR1b to INR5b profitable power brands.
 As a major part of its marketing and brand-building strategies, investments are
directed toward these power brands, which are endorsed by celebrities with
large fan followings in India.

Exhibit 8: Declining share of marketing investment to push margins

Brand Promotion and Marketing investment (INRb) As a % of ICH sales

16
15 15

13

0.8 1.1 1.3 1.3

FY21 FY22 FY23 FY24

Source: MOFSL, Company

 In the past three years, the company has launched 150+ new products and SKUs
and has spent 13-16% of its ICH revenues on media and trade promotion, which
resulted in a 29% CAGR in its power brands in the same period.
 PIRPHARMA aims to strengthen its brands by increasing the reach to more
towns and cities and increasing its presence in alternative channels such as e-
commerce.
 New products launched over the last two years contribute 11% to ICH revenue.
 The company plans to launch more brands, along with the line extension.
Recently the company launched the men’s grooming category, which would
drive growth over the medium term. The company is also looking to grow
through the inorganic route.

25 September 2024 9
 Piramal Pharma

Exhibit 9: Scale up in Power brands to drive ICH business

Source: MOFSL, Company

Innovation strategy to drive volume through high-potential concepts

 New products launched over the last two years contributed 11% to ICH revenue.
 Going ahead, the company plans to launch more brands, along with the line
extension base driven by
 Identifying new trends early in the lifecycle and aiming for the first-to-
market proposition
 Participating in low-complexity, high-potential categories, like skin care,
VMS, analgesics, etc.
 Identifying active ingredients with clear benefits like Niacinamide, Vitamin-
C, Peptides, etc. and participating in fast-growing segments in the e-
commerce space with potential to expand offline
Leveraging multi-channel distribution strategy to increase reach
 PIRPHARMA has a strong presence across various retail channels with 180,000
chemists and cosmetics stores and gift shops. Furthermore, it has presence in
8,000 modern trade stores.
 To increase its reach, the company has presence on over 22+ e-commerce
platforms in India. Additionally, it has launched its own direct-to-consumer
(D2C) website, Wellify.
 Due to extensive reach on e-commerce and other technology platforms, e-
commerce sales grew at 58% CAGR in the last three years and accounted for
20% of ICH sales (vs. 10% in FY21).
 To further expand its reach in under-penetrated areas, PIRPHARMA is exploring
new e-commerce delivery formats.
 Accordingly, we expect ICH business to register 13% CAGR over FY25-27.
Exhibit 10: Omni-Channel expansion to increase footprints

Source: MOFSL, Company

25 September 2024 10
 Piramal Pharma

Story in charts
Exhibit 1: Expect 17% sales CAGR in CDMO over FY25-27 Exhibit 2: Expect 13% sales CAGR in CHG over FY25-27

CDMO sales (INRb) Complex Hospital generics sales (INRb)

25 28 32 36 40 40 47 55 64 76
14 17 19 17 20 23 25 27 31 35
FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
Source: Company, MOFSL Source: Company, MOFSL

Exhibit 3: Expect 13% sales CAGR in ICH over FY25-27 Exhibit 4: Expect 13% CAGR in total sales over FY24-26

ICH (INRb) Total sales (INRb)

3 3 4 5 7 9 10 11 12 14 43 48 54 58 67 72 82 93 107 125
FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E
FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25E

FY26E

FY27E

Source: Company, MOFSL Source: Company, MOFSL

25 September 2024 11
 Piramal Pharma

Financials and valuations

Consolidated - Income Statement (INR m)
Y/E March FY22 FY23 FY24 FY25E FY26E FY27E
Total Income from Operations 65,591 70,816 81,712 93,308 1,07,376 1,24,914
Change (%) NA 8.0 15.4 14.2 15.1 16.3
EBITDA 9,497 7,286 11,963 15,095 20,231 24,912
Margin (%) 14.5 10.3 14.6 16.2 18.8 19.9
Depreciation 5,862 6,767 7,406 7,554 7,932 8,328
EBIT 3,635 520 4,557 7,542 12,300 16,584
Int. and Finance Charges 1,983 3,442 4,485 3,761 3,282 2,982
Other Income 2,758 2,251 1,754 1,800 1,550 1,650
Share of net profit of associates 590 543 595 625 656 699
PBT bef. EO Exp. 5,001 -128 2,421 6,205 11,224 15,950
EO Items 151 1,074 633 0 0 0
PBT after EO Exp. 4,850 -1,202 1,788 6,205 11,224 15,950
Total Tax 1,090 663 1,615 2,792 4,153 5,583
Tax Rate (%) 22.5 -55.2 90.3 45.0 37.0 35.0
Minority Interest 0 0 0 0 0 0
Reported PAT 3,760 -1,865 173 3,413 7,071 10,368
Adjusted PAT 3,879 -798 560 3,413 7,071 10,368
Change (%) NA NA NA 509.3 107.2 46.6
Margin (%) 5.9 -1.1 0.7 3.7 6.6 8.3

Cons Balance sheet (INR m)

Y/E March FY22 FY23 FY24 FY25E FY26E FY27E
Equity Share Capital 11,859 11,933 13,230 13,230 13,230 13,230
Other equity 55,107 55,802 65,884 69,297 76,368 86,736
Net Worth 66,966 67,735 79,114 82,526 89,597 99,965
Minority Interest 0 0 0 0 0 0
Total Loans 41,283 56,421 47,102 47,102 47,102 47,102
Deferred Tax Liabilities 1,920 2,193 2,292 2,292 2,292 2,292
Capital Employed 1,10,169 1,26,349 1,28,507 1,31,920 1,38,991 1,49,359
Gross Block 36,288 42,652 49,908 51,833 55,017 59,577
Less: Accum. Deprn. 5,862 6,767 7,406 7,554 7,932 8,328
Net Fixed Assets 30,426 35,885 42,503 44,280 47,086 51,249
Goodwill on Consolidation 10,305 11,075 11,226 11,226 11,226 11,226
Intangible assets 33,053 33,382 31,672 31,672 31,672 31,672
Capital WIP 6,732 8,529 5,657 5,657 5,657 5,657
Total Investments 3,123 2,334 2,611 2,611 2,611 2,611
Curr. Assets, Loans&Adv. 36,043 43,078 49,535 50,731 55,084 63,744
Inventory 13,888 16,814 21,759 23,174 23,623 27,481
Account Receivables 17,853 17,993 21,344 22,240 22,064 25,667
Cash and Bank Balance 3,290 3,076 4,826 3,711 7,792 8,990
Loans and Advances 1,013 5,195 1,606 1,606 1,606 1,606
Curr. Liability & Prov. 13,172 13,600 19,501 19,062 19,150 21,605
Account Payables 10,264 11,927 15,384 14,945 15,033 17,488
Other Current Liabilities 2,445 1,074 3,358 3,358 3,358 3,358
Provisions 464 599 759 759 759 759
Net Current Assets 22,871 29,478 30,034 31,670 35,934 42,139
Deferred Tax assets 2,973 3,493 3,865 3,865 3,865 3,865
Misc Expenditure 687 2,172 940 940 940 940
Appl. of Funds 1,10,169 1,26,349 1,28,507 1,31,920 1,38,991 1,49,359
E: MOFSL Estimates

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 Piramal Pharma

Financials and valuations

Ratios
Y/E March FY22 FY23 FY24 FY25E FY26E FY27E
Basic (INR)
EPS 2.9 -0.6 0.4 2.6 5.3 7.8
Cash EPS 8.2 5.0 6.7 9.2 12.6 15.7
BV/Share 56.1 56.8 66.3 69.2 75.1 83.8
DPS 0.4 0.5 0.1 0.4 0.8 1.2
Payout (%) 15.6 NA 57.0 17.6 17.6 17.6
Valuation (x)
P/E 73.7 NA 510.2 83.7 40.4 27.6
Cash P/E 26.5 43.2 32.4 23.5 17.2 13.8
P/BV 3.8 3.8 3.3 3.1 2.9 2.6
EV/Sales 4.9 4.8 4.0 3.5 3.0 2.6
EV/EBITDA 34.1 46.5 27.4 21.8 16.1 13.0
Dividend Yield (%) 0.2 0.2 0.0 0.2 0.4 0.5
FCF per share 0.0 0.0 0.0 0.0 0.0 0.0
Return Ratios (%)
RoE 5.8 -1.2 0.8 4.2 8.2 10.9
RoCE 9.2 3.7 0.5 4.0 6.6 8.4
RoIC 5.8 1.4 0.8 6.9 12.6 16.3
Working Capital Ratios
Asset Turnover (x) 0.6 0.6 0.6 0.7 0.8 0.8
Inventory (Days) 77 87 97 91 80 80
Debtor (Days) 99 93 95 87 75 75
Creditor (Days) 57 61 69 58 51 51
Leverage Ratio (x)
Net Debt/Equity 0.5 0.8 0.5 0.5 0.4 0.4

Cons Cash flow statement (INR m)

Y/E March FY22 FY23 FY24 FY25E FY26E FY27E
OP/(Loss) before Tax 4,410 -1,675 1,198 6,205 11,224 15,950
Depreciation 5,862 6,767 7,406 7,554 7,932 8,328
Interest & Finance Charges 1,983 1,983 1,983 1,983 1,983 1,983
Direct Taxes Paid -1,694 -1,694 -1,694 -1,694 -1,694 -1,694
(Inc)/Dec in WC -3,013 -2,710 -2,520 -2,750 -184 -5,007
CF from Operations 7,664 4,839 10,046 11,978 18,100 16,671
Others 0 0 0 0 0 0
CF from Operating incl EO 7,664 4,839 10,046 11,978 18,100 16,671
(Inc)/Dec in FA -8,571 -9,451 -7,104 -9,331 -10,738 -12,491
Free Cash Flow -907 -4,612 2,941 2,647 7,363 4,180
(Pur)/Sale of Investments -485 -3,751 2,724 0 0 0
Investment in Associate -7,907 0 0 0 0 0
Others -1,158 -186 40 0 0 0
CF from Investments -18,121 -13,388 -4,340 -9,331 -10,738 -12,491
Issue of Shares 0 0 10,359 0 0 0
Inc/(Dec) in Debt 9,830 11,558 -9,965 0 0 0
Interest Paid -1,388 -2,710 -4,618 -3,761 -3,282 -2,982
Dividend Paid -500 -670 0 0 0 0
CF from Fin. Activity 7,942 8,178 -4,224 -3,761 -3,282 -2,982
Inc/Dec of Cash -2,515 -371 1,482 -1,114 4,081 1,198
Opening Balance 2,620 3,290 3,076 4,825 3,711 7,792
Closing Balance 105 2,919 4,557 3,711 7,792 8,989
Unrealised loss / (gain) on forex 747 52 178 0 0 0
Term Deposit with Banks 2,438 105 90
Total Cash & Cash Eq 3,290 3,076 4,825 3,711 7,792 8,989

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

25 September 2024 13
 Piramal Pharma

NOTES

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 Piramal Pharma

Explanation of Investment Rating

Investment Rating Expected return (over 12-month)
BUY >=15%
SELL < - 10%
NEUTRAL < - 10 % to 15%
UNDER REVIEW Rating may undergo a change
NOT RATED We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall be within following 30 days take
appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations, is engaged in
the business of providing Stock broking services, Depository participant services & distribution of various financial products. MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National
Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for
its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of
Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products. Details of
associate entities of Motilal Oswal Financial Services Limited are available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or
derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial
instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and
other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are
completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOFSL
may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage
service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical
Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity and therefore it can
have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary
to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures
Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg.
No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to
“Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with
professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian
Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the
United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and
under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOFSL, including the products and
services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act
and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any
investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption
from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission
("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities
International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer,
MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research
analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets (Singapore) Pte. Ltd. (“MOCMSPL”) (UEN 201129401Z), which is a holder of a capital markets services license and an exempt
financial adviser in Singapore.This report is distributed solely to persons who (a) qualify as “institutional investors” as defined in section 4A(1)(c) of the Securities and Futures Act of Singapore (“SFA”) or (b)
are considered "accredited investors" as defined in section 2(1) of the Financial Advisers Regulations of Singapore read with section 4A(1)(a) of the SFA. Accordingly, if a recipient is neither an “institutional
investor” nor an “accredited investor”, they must immediately discontinue any use of this Report and inform MOCMSPL .
In respect of any matter arising from or in connection with the research you could contact the following representatives of MOCMSPL. In case of grievances for any of the services rendered by MOCMSPL
write to grievances@motilaloswal.com.
Nainesh Rajani
Email: nainesh.rajani@motilaloswal.com
Contact: (+65) 8328 0276
.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company at the end of the month immediately preceding the date of publication of the Research Report or date of the public
appearance.
- received compensation/other benefits from the subject company in the past 12 months
- any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific
recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an
inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

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- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or
act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
- Served subject company as its clients during twelve months preceding the date of distribution of the research report.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider demat accounts
which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is,
or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any
way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is based on the facts, figures
and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from publicly available media or other sources
believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All
such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or
subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not
treat recipients as customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to
any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an
offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation
that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make
their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment
by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in
this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not
be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not
suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures
of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject
to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its
associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document.
They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as
a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed
therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or
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where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities
described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to
observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
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This report is meant for the clients of Motilal Oswal only.
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 - 71934200 / 71934263; www.motilaloswal.com.
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Registration details of group entities.: Motilal Oswal Financial Services Ltd. (MOFSL): INZ000158836 (BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412 . AMFI:
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Customer having any query/feedback/ clarification may write to query@motilaloswal.com. In case of grievances for any of the services rendered by Motilal Oswal Financial Services Limited (MOFSL) write to
grievances@motilaloswal.com, for DP to dpgrievances@motilaloswal.com.

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