Q3FY21 Company Update - Suven Pharmaceuticals - ICICI Direct

Q3FY21 revenue grew 53.8% YoY to Rs. 275 crore amid 1.75x growth in pharma CRAMS division sales to Rs. 217 crore. However, specialty chemical CRAMS nearly halved to Rs. 35 crore whereas formulation sales fell 30% to Rs. 23 crore. More importantly, EBITDA margin was at 50.2% (up 568 bps YoY) in Q3 on the back of better operational leverage, favourable product mix. Hence, EBITDA grew 73.5% to Rs. 138 crore. PAT nearly doubled YoY to Rs. 114 crore.

Valuation & Outlook

Suven reported an exemplary quarterly performance that was above I-direct estimates on all fronts. Despite pandemic and high base, it has guided 15-20% growth based on strong order book position (albeit some expected delays). Regarding the optically high capex plan of Rs. 600 crore for modernisation, technology upgradation, we believe this has to do with the need to cater to the changed priorities and requirements at the behest of the clients, the benefits of which may be visible in the long run. We continue to emphasise on the strong execution capability and focused approach without the burden of success/failure of the innovative pipeline. We maintain BUY rating with a TP of Rs. 575 (earlier Rs. 400) based on 28x on FY23E EPS of Rs. 20.5.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_SuvenPharma_CoUpdate_Feb21.pdf

Source : Equity Bulls

Keywords