• Contract development and manufacturing organisations (CDMO)
• Complex hospital generics (critical care)
• Consumer healthcare (OTC).
PPL owns 17 development and manufacturing facilities across India, US and UK with capabilities in sterile, API, formulations, drug discovery and manufacturing of nutrition products. The company holds 49% stake in AbbVie Therapeutics, JV with Allergan, and 33.33% in Yapan Bio which operates in the biologics / bio-therapeutics and vaccine segments.
Investment Rationale:
Q4FY25 results- Slightly weaker exit quarter – Revenues grew ~8% YoY to ₹2,754 crore, driven by ~8% growth in the CDMO business (59% of sales) to ₹1,788 crore. The Complex Hospital Generics segment (29% of sales) grew 6% to ₹705 crore, while the India Consumer Business (12% of sales) grew ~15% to ₹274 crore. Gross profit margin (GPM) for the quarter stood at 65.3% (up 507 bps); however, EBITDA grew only ~6% YoY to ₹561 crore, with the EBITDA margin declining by 39 bps to 20.4%, impacted by higher employee expenses and other expenditures. CDMO business was driven by order inflows, especially for on-patent commercial manufacturing. The company also witnessed good demand for differentiated offerings with increase in customer enquiries and visits. In India Consumer Business, growth was driven by new launches and 22% growth in power brands. In Complex Hospitals Generics, the growth was driven by volume growth in the inhalation anaesthesia portfolio in the US and emerging markets.
• Inventory adjustment at a key customer to impact CDMO tempo in FY26; Normalisation expected in FY27- One of the CDMO customers has built significant inventory for a particular product launch over the last two fiscals. The management anticipates this to rationalise in FY26. The management expects order flow to resume from the same customer after the completion of rationalisation exercise. Excluding this, the management expects double digit growth in CDMO. The guidance for FY26 for overall revenue growth is now mid-single digit and EBITDA margins in mid-teen. The management has reiterated its FY30 aspirational revenue target of US$ 2 billion revenues with ~25% EBITDA margins and high teens ROCE.
Rating and Target price
We now value PPL at ₹ 290 based on SoTP valuations, i.e. 20x FY27E CDMO EBITDA (earlier 21x), 17x FY27E CHG EBITDA, 2x FY27E Consumer Healthcare Sales (earlier 1.5x), and 10x PAT from AbbVie JV.
