Supriya Life up 3% as Choice initiates with 'Buy' on strong margin strength

Analysts believe the company is well-positioned for "sustained, high-quality growth," reinforcing long-term earnings visibility

Analysts at Choice Institutional Equities have initiated coverage on Supriya Lifescience stock with a ‘Buy’ rating, citing the company’s strong backward integration, leadership in niche therapies, and strategic pivot towards high-margin contract development and manufacturing (CDMO) opportunities, as well as GLP-1 intermediates.

 

Analysts Maitri Seth, Deepika Murarka, and Stuti Bagadia believe the company is well-positioned for “sustained, high-quality growth,” reinforcing long-term earnings visibility. They expect revenue, earnings before interest, taxes, depreciation, and amortisation (Ebitda), and profit after tax (PAT) to clock a CAGR of 21.6 per cent, 18.9 per cent, and 19.4 per cent, respectively, over FY25–28E, driven by operating leverage and a richer mix of complex, higher-value products.

 

 

At 1:06 PM on Wednesday, November 11, Supriya Lifescience shares were trading around ₹758.30, up nearly 2 per cent from the previous close of ₹743.35, and touched an intra-day high of ₹766.50 on the BSE.

 

Choice has valued the company using a discounted cash flow (DCF) approach, arriving at a target price of ₹1,030 per share, implying a 34.4 per cent upside from current levels. The target price translates into an implied P/E multiple of 29x, broadly in line with sector peers, and a PEG ratio of 1.5x.  ALSO READ | ONGC Q2 show misses estimates on higher costs; brokerages remain cautious

Margin moat built on integration and therapy leadership

According to Choice, Supriya Lifescience has built a durable margin moat, consistently delivering 30–35 per cent Ebitda margins—well above the mid-20s range reported by Indian API peers. This structural edge stems from two entrenched strengths: deep backward integration and therapy leadership.

 

“About 18 integrated products contribute 81 per cent of Q1FY26 revenue, insulating the business from input cost volatility and ensuring stable realisations. Its leadership in anesthetic and anti-anxiety APIs, segments with limited domestic competition, supports premium pricing power,” the analysts wrote.

 

Margins, they said, may soften temporarily to around 33 per cent in FY26E due to Ambernath facility scale-up costs. However, the brokerage expects Ebitda margins to normalise at ~35 per cent by FY28E, sustaining structural leadership.

Demand visibility precedes capacity addition

Choice noted that Supriya’s historical capacity utilisation levels of 85–86 per cent are well above the industry average. “This is not a capacity-led growth story; it is a demand-pull expansion,” the brokerage said.

 

The commissioning of the Ambernath formulation facility is expected to temporarily ease utilisation to about 75 per cent, providing strategic slack ahead of visible demand. Utilisation is expected to rebound to 80–85 per cent by FY27-end, restoring capacity tightness.

 

“Importantly, Supriya is planning the next leg of expansion with the construction of the Patalganga site (3x Lote capacity), which begins at the end of FY27—just as existing sites approach peak utilisation,” the analysts added.  ALSO READ | RIL stock jumps 10% in 1 month, nears record high. Should you buy or hold?

CDMO thrust and global diversification to drive next phase

 

Choice highlighted that a 10-year contract with a European pharma major marks Supriya’s transition from a pure API player to a CDMO-backed growth model. The Ambernath facility provides dedicated capacity for CDMO supplies, strengthening execution capabilities.

 

Additionally, early work on GLP-1 intermediates opens a medium-term growth opportunity in one of the world’s fastest-growing therapeutic categories. By FY30E, Europe is expected to contribute about 41.5 per cent of total revenue, while exposure to the US will remain below 3 per cent, shielding margins from potential tariff risks, the analysts said.