Piramal Pharma CDMO recovery and pipeline support FY30 growth visibility

Investment View and Key Takeaways

ICICI Securities’ July 30, 2026 result update says Piramal Pharma’s growth momentum has been restored after a difficult FY26. The broker maintains its BUY recommendation and revises its target price to Rs 240 per share, compared with a CMP of Rs 195.

The favourable view is supported by better-than-expected Q1 FY27 performance, improving demand and order activity in CDMO, traction in Complex Hospital Generics, and continued growth in consumer healthcare. ICICI Securities believes the company’s pipeline, ongoing capacity investments and management’s long-term CDMO aspirations provide growth visibility.

Business Overview

Piramal Pharma operates across three businesses: Contract Development and Manufacturing Organisation (CDMO), Complex Hospital Generics (CHG), and Piramal Consumer Healthcare (PCH). The company has 17 development and manufacturing facilities across India, the US and the UK, covering sterile products, APIs, formulations, drug discovery and nutrition-product manufacturing.

Piramal Pharma also owns a 49% stake in AbbVie Therapeutics, a joint venture with Allergan, and a 33.33% stake in Yapan Bio, which operates in biologics, biotherapeutics and vaccines.

Q1 FY27 Financial Performance

Reported revenue increased 17.4% year-on-year to Rs 2,270 crore in Q1 FY27. Growth was broad-based across all three operating segments.

Gross margin was 62.5%, down 165 basis points year-on-year. EBITDA increased about 83% year-on-year to Rs 195.2 crore, while the EBITDA margin expanded 308 basis points to 8.6%, supported principally by lower employee costs and other expenses. The quarterly EBITDA margin was lower than Q4 FY26’s 16.7% because of quarterly seasonality and cost movements.

CDMO Recovery and Growth Pipeline

ICICI Securities highlights broad-based CDMO revenue growth after a year-long hiatus. Improving biopharma funding is translating into stronger requests for proposals and a pickup in CDMO order inflows. Piramal Pharma has a CDMO pipeline of 157 molecules, including 25 in Phase III.

The company is developing end-to-end antibody drug conjugate capabilities through investments at its Lexington and Riverview facilities in the US. Management stated that overseas facilities typically generate gross margins of 75% to 85%, compared with 55% to 65% in India, resulting in a blended company gross margin of 64% to 65%.

The Riverview facility has inaugurated a commercial-scale payload-linker development and manufacturing site. A large contract affected by destocking is not expected to generate FY27 sales, although discussions with the innovator on other projects are continuing.

Management Guidance and Capacity Expansion

Management maintained its original FY27 annual guidance and reiterated its target of US$1.2 billion in CDMO revenue by FY30. It also reaffirmed an overall EBITDA-margin objective of 25% by FY30, with CDMO expected to be the principal driver.

• FY27 capex guidance is US$120 million to US$135 million, of which US$21 million had been spent at the time of the call.
• Expansion of sterile injectable capacity at Lexington remains on track for completion by the end of calendar year 2027.

Complex Hospital Generics and Consumer Healthcare

Complex Hospital Generics

CHG demand was encouraging in selected ex-US markets, with traction in ex-US inhalation anaesthesia. Management expects Kenalog supplies to commence in Q2 FY27, supporting growth.

Piramal Consumer Healthcare

The PCH business delivered mid-teen growth through its power brands, rapid e-commerce expansion and wider distribution. Management is investing about 12% of consumer-business sales in media and trade promotion, focused on brand building, premiumisation and high-potential launches. The company has also implemented price increases to mitigate input-cost inflation.

Financial Estimates

Valuation and Target Price

ICICI Securities derives the Rs 240 target price using a sum-of-the-parts valuation. The valuation applies 17 times FY28E CDMO EBITDA, 15 times FY28E CHG EBITDA, two times FY28E PCH sales and 10 times PAT from the AbbVie joint venture.

This produces a targeted market capitalisation of Rs 31,448 crore after deducting FY28E net debt of Rs 4,468.3 crore.

Key Risks

• Higher sensitivity of the CDMO business to overall company performance.
• Price erosion and supply issues in Complex Hospital Generics.