Piramal Pharma gains 7% after Jefferies assigns ‘buy’ rating, sees 45% upside

If Piramal Pharma manages to achieve a 15% revenue growth, it could result in a 45% growth in earnings before interest, taxes, depreciation, and amortisation (EBITDA) for FY25, the brokerage said.

Reacting to the same, shares of Piramal Pharma rose as much as 7% to an intra-day high of ₹ 125.05 on BSE. This has pushed the company's market capitalisation close to ₹16,000 crore.

Currently, Piramal Pharma's stock is trading at  valuations of 14 times and 12 times the EV-EBITDA multiples for FY25 and FY26 respectively. Jefferies expects that with the company's momentum in earnings and performance, its valuation will likely be re-evaluated upward in the future.

Last month, Nandini Piramal, Chairperson of Piramal Pharma Ltd, in an interview with CNBC-TV18 said the company is focused on reducing debt through organic growth. She said one of the significant hurdles the company encountered following listing, was its absence from index funds, prompting a concerted effort to educate the market about its business operations for the past year.

Piramal Pharma, the demerged pharma entity of Piramal Enterprises Ltd, made its market debut in October 2022.

The company raised ₹1,050 crore via a rights issue and utilised the funds to reduce debt. With current gross debt levels at ₹4,000 crore, the company is looking to reduce its debt to equity ratio from the current 3.1 times to below 3 by the end of FY24.

Shares of Piramal Pharma were trading 3.42% higher at ₹120.85 apiece on BSE at 11:04 am.