On June 16, Piramal Pharma shares surged over 5% in the early trade, led by prospects of a turnaround in the company’s Contract Development and Manufacturing Organisation (CDMO) business in FY24.

Global research and broking company Jefferies remains confident of witnessing an important margin expansion for Piramal Pharma striking its CDMO business amid the New Chemical Entity contracts shot by the firm.

Piramal Pharma’s CDMO business outlook is anticipated to recover from the second half of FY24 as encounters over the last 12 months are committed, Jefferies stated.

CDMOs are pharma firms that take from clients, offering them varied services from drug development to manufacturing.

Piramal Pharma started FY24 on a robust note, with a healthy order book in the CDMO, snowballing Full-Time Equivalent demand in finding and supply normalisation in complex hospital generics.
At 10 am, Piramal Pharma shares were quoting at Rs 95.90 on the NSE, a gain of 4.1% from the previous close.

It also believes that Piramal’s consumer health business will turn EBITDA positive in FY24 amid robust high-teen revenue growth.

The firm forecasted that the Operating leverage and lower base should aid Piramal Pharma to record high-teens EBITDA and CAGR (compounded annual growth rate) in coming years.

Jefferies has shown a “buy” call for the stock and a price target of Rs 115 in a base case scenario and Rs 155 in a bull case.
Expectations of enclosure on the FTSE index in the rebalancing later also generated some buying in the counter. The inclusion in the FTSE index is anticipated to bring inflows worth $12 million in the counter, said Nuvama Alternative & Quantitative Research.