NEW DELHI: Piramal Pharma (PIRPHARM IN) has outlined an ambitious roadmap for FY30, aiming to double its revenue to USD 2 billion, driven by strong growth across its key business segments. Management shared these targets during the analyst day held on 24 September 2024. Achieving a compounded annual growth rate (CAGR) of 13% would position Piramal Pharma for substantial returns, though the real challenge lies in expanding its EBITDA margin from 14% to 23%.
“If we meet these goals, investors could expect ~15% annualized returns over the next six years,” the management stated. However, they acknowledged that reaching more than triple the current EBITDA could be a “tough ask.”
The Contract Development and Manufacturing Organization (CDMO) segment, which currently contributes 60% of Piramal’s topline, is set to be the major growth driver. While the CDMO industry typically grows by 7-8%, Piramal expects to outpace this due to its expertise in hi-tech areas, vertical integration, and the end-to-end nature of its solutions.
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The company also stands to benefit from the proposed Biosecure Act in the US, which could provide tailwinds for its growth trajectory. Management forecasts the CDMO business will be the fastest-growing segment in the portfolio.
In the Complex Hospital Generics (CHG) segment, Piramal Pharma currently generates ~USD 300 million in revenue with an EBITDA margin exceeding 25%. The company targets to double this figure to USD 600 million by FY30, with a CAGR of 12.3%, surpassing its historical growth rate of 10% from FY16 to FY24.
Key growth drivers include expanding into injectable anesthetics, pain therapeutics, and intrathecal therapeutics. “We’re aiming for market share gains in inhalation anesthetics, along with geographic expansion,” management noted.
The India-focused Consumer Healthcare (CHG) business, with a current turnover of USD 120 million, is targeted to reach USD 200 million by FY30. The company plans to achieve this through scaling its power brands, expanding e-commerce, and launching new products.
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Management is optimistic about turning around the consumer healthcare segment, aiming to push EBITDA margins into double digits by FY30. “We see a strong opportunity for a turnaround and growth in this segment,” they added.
According to Piramal Pharma’s estimates, achieving USD 2 billion in revenue and a 25% EBITDA margin in CDMO and CHG, along with double-digit margins in consumer healthcare, could translate to an INR 39 billion EBITDA by FY30 at the current exchange rate.
“If we hit these targets, applying a 15x one-year forward EV/EBITDA ratio, our equity value could reach INR 546 billion by the end of FY29,” management projected. This could result in a ~15% annualized return from current levels, underscoring the potential for significant investor gains if the company delivers on its goals.