EUR 120.00 For Business Accounts Only

MOSL: SOLARA ACTIVE PHARMA (Buy)- Comprehensive approach in API/CRAMS to drive growth

SOLARA ACTIVE PHARMA: Comprehensive approach in API/CRAMS to drive growth

(SOLARA IN, Mkt Cap USD0.8b, CMP INR1728, TP INR2050, 20% Upside, Buy)

 

Customer additions/differentiated technology aids better visibility in the CRAMS business

• SOLARA delivered an in line 1QFY22 earnings, led by increased contribution from new products, ramp in other markets like Asia-Pacific, and healthy growth in the Contract Research and Manufacturing Services (CRAMS) business. SOLARA has delivered a robust performance, with EBITDA margin/PAT growing to 24%/INR2.2b in FY21 from 14%/INR380m in FY18. SOLARA further aims to achieve 25% revenue CAGR over FY21-25 through enhanced portfolio offering in generic API, strong scale-up in the CRAMS segment, and the inorganic route.
• We raise our FY22E/FY23E EPS estimate by 5%/7% to factor in: a) benefits from successful backward integration for Ibuprofen manufacturing, b) extended tax benefits, and c) increased growth prospects in the CRAMS segment. We continue to value SOLARA at 13x its 12-month forward EV/EBITDA to arrive at our TP of INR2,050.
• We remain positive on SOLARA as it is well-placed in the API space (product offering supported by manufacturing capacity/capability) to take advantage of the favorable demand scenario and building its presence across the CRAMS value chain. We reiterate our BUY rating.