Sai Life soars 25% in 5 weeks, hits record high in weak market; here's why

ICRA expects Sai Life Sciences to maintain strong growth momentum over the medium term on the back of a healthy growth outlook for the industry, good product mix and deepening customer engagement.

Sai Life Sciences share price today

 

Shares of Sai Life Sciences (SLS) hit a new high of ₹992, surging 3 per cent on the BSE in Friday’s intra-day trade in an otherwise weak market. In comparison, the BSE Sensex was down 0.61 per cent at 81,749.18 at 10:06 AM.

 

In the past two trading days, the stock price of the pharmaceutical company has soared 7 per cent. Further, in the past five weeks, it zoomed 25 per cent, as against less than 1 per cent rise in the BSE Sensex. 

 

SLS overview, outlook

 

SLS is a pure-play fully integrated, innovator focused contract research, development and manufacturing organisation (CRDMO) providing end-to-end services across the discovery, development and manufacturing value chain for small molecule NCEs. The discovery services generate 35-40 per cent of the company’s revenues, while the remaining is generated by contract development and manufacturing (CDMO).

 

SLS has a strong business profile with an integrated presence that enables it in providing end-to-end services across the drug discovery, development, and manufacturing value chain, for small molecule new chemical (NCEs) entities to global innovators and biotech companies. The company has established long relationships with more than 300 innovator clients, including 18 of the leading 25 big pharma companies.

 

SLS’ revenues increased at a compounded annual growth rate (CAGR) of 25 per cent between FY2022 and FY2025 and by 43 per cent in the first nine months (April to December) of the financial year 2025-26 (9MFY26) to ₹1,590.4 crore and profitability also improved over the last two years with an operating profit margin (OPM) of 24.2 per cent in FY2025 and 28.6 per cent in 9MFY26.

 

Moreover, SLS is expected to maintain strong growth momentum over the near to medium term on the back of a healthy growth outlook for the industry, good product mix and deepening customer engagement, ICRA said in its rating rationale.

 

Meanwhile, SLS’ revenues are concentrated in the regulated markets considering the nature of the business, with exports contributing up to 99 per cent to the total revenues, primarily driven by companies in the US and Europe. Supported by solid demand, disciplined execution, and capex programs progressing as planned, SLS’s management remains confident in sustaining positive growth momentum. 

 

JM Financial Institutional Securities sees more upside for the stock

 

SLS’s performance was driven by continued momentum in the CDMO business, which grew 31 per cent YoY, while the CRO segment also supported growth with a 19 per cent YoY increase in Q3. The management maintained confidence in achieving 18–20 per cent revenue growth and 28–30 per cent EBITDA margins over the coming years. 

 

The company continues to advance capex ahead of schedule amid improved customer order visibility and added seven new products during the period, including three commercial and four Phase III projects, which should support growth next year alongside the ramp-up in existing commercial and late-stage programs. 

 

Analysts at JM Financial Institutional Securities project Sai to deliver 25/35/49 per cent revenue/EBITDA/PAT CAGR over the next two years and have upgraded its earnings estimates by 13/17 per cent to reflect improved revenue visibility and margins. The brokerage firm values the stock at 28x to arrive at a target price of ₹1,318 and reiterates a 'BUY' rating, with Sai remaining its top pick in the CDMO space.  ========================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.