 "InCred Equities sees 41% upside in Piramal Pharma; initiates 'Buy'")
InCred Equities has initiated coverage on Piramal Pharma stock, in a report dated September 24, 2025, with a ‘Buy’ rating and a target price of ₹276, which implies a target of 40.5 per cent from Thursday’s close at ₹196.4 per share. Analysts believe Piramal Pharma is uniquely positioned among India-origin Contract Research, Development, and Manufacturing Organisation (CDMO) with a diversified model spanning contract development, complex hospital generics (CHG), and consumer healthcare (PCH).
At 1:35 OM, Piramal Pharma's share price was trading 2.95 per cent lower at ₹189.45 per share. In comparison, the BSE Sensex was down 0.7 per cent at 80,595.42.
Year-to-date (Y-T-D), Piramal Pharma shares have lost 23 per cent, as compared to Sensex’s rise of 5 per cent. READ STOCK MARKET UPDATES LIVE
Why is InCred Equities upbeat on Piramal Pharma?
Global footprint underpins CDMO strength
Piramal Pharma’s CDMO spans the value chain from discovery to clinical and commercial supply, across Antibody-Drug Conjugates (ADCs), Highly Potent Active Pharmaceutical Ingredients (HPAPIs), peptides, and sterile injectables. Its global footprint and breadth provide scale and proximity advantages. However, analysts reckon growth remains sensitive to biotech funding cycles, regulatory outcomes, and site utilisation risks, particularly around its large US/UK capital expenditure. Any slower-than-expected backfill could compress return on capital employed (RoCE) despite the long-term strategic build-out.
CHG: Stable cash-generative engine
The Complex Hospital Generics (CHG) segment is resilient, above-sector margins, led by inhalation anaesthetics (Sevoflurane) and specialised injectables like Intrathecal Baclofen, according to brokearge analysis. FY25 revenue rose 8 per cent year-on-year (Y-o-Y) to ₹2,633 crore, supported by Key Starting Material (KSM) integration and multi-site manufacturing. While reliable, InCred reckons CHG faces tender-driven price erosion, regulatory scrutiny on anaesthetics, and niche concentration risks that could invite competition
Consumer healthcare: India cash flow anchor
The company’s consumer healthcare arm, Piramal Consumer Health, with brands like Lactocalamine, Littles, Polycrol, Tetmosol, and i-pill, provides steady cash flows, supporting India's growth and brand equity, according to the brokerage. The business is asset-light and offers optionality in premiumisation, over-the-counter (OTC), and digital channels, though it requires consistent advertising and promotion (A&P) investment and disciplined stock-keeping unit (SKU) management. Reliance on licensed Bayer brands adds scale but keeps margins structurally lower than owned labels, noted InCred. ALSO READ | Trump hits pharma with 100% tariff on drug imports; analysts decode impact
Valuation
Analysts value Piramal Pharma at 24.6x FY27F enterprise value / Earnings before interest, tax, depreciation and amortisation (EV/Ebitda) (peer median), applied to estimated ₹1,749 crore FY27F Ebitda, adjusted for ₹4,625 crore net debt. The brokerage assumes service Ebitda margins rising from 12.9 per cent in FY26F, improving 50 basis points (bps) annually through FY28F, as CDMO utilisation scales and mix normalises.