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  • 10 Aug 2022
  • ICICIdirect Research

SUVEN POSTS ROBUST MARGINS AMID CRAMS GROWTH

SUVENPHAR - 1288 Change: 4.80 (0.37 %)

News: Revenues grew 28% YoY to Rs 339 crore driven by 37% YoY growth in CRAMS-Pharma to Rs 210 crore and 38% YoY growth in CRAMS-Spec Chem to Rs 117 crore. EBITDA margins improved 108 bps YoY to 44.5% mainly due to higher gross margins (up 43 bps to 71.3%). EBITDA grew 32% YoY to Rs 151 crore while PAT was up 2% YoY to Rs 107 crore. Delta vis-a-vis EBITDA was due to higher tax expense.

View: Suven’s quarterly revenues were in-line with I-direct estimates while margins were better than expected. For Suven, CRAMS-Pharma remain a high-value, high-margin business, involving the supply of intermediates for NCEs. However, on a Covid-led high base of FY22 and gradual transformation of big pharma from Covid to non-Covid investments, FY23 is likely to be a steady year. CRAMS in Spec-Chem is expected to ramp up in FY24 with likely repeat business in the third molecule and another new molecule in late development stage. In formulations, management is guiding for operationalization of Casper Pharma from March,2023 and achieve ~ Rs300-400 crore top-line by FY25. Suven is investing Rs 600 crore for modernisation, technology upgradation, which likely stems from the need to cater to the changed priorities and requirements of its clients, the benefits of which may be visible in the long run. However, we continue to emphasise on the company’s foray into formulations with Casper Pharma, in a highly competitive space of generic OSD in US with diminishing returns.

Impact: Positive.