Jefferies rates 5 CRDMO stocks ‘Buy’ with up to 20% upside potential 

Jefferies on CRDMO sector 

The brokerage’s latest assessment follows a strong June quarter for India’s CRDMO sector. Jefferies said companies under its coverage delivered 19% year-on-year growth, the highest growth rate in the past seven quarters. Six of the nine companies covered by the brokerage beat its operational earnings estimates.

Management commentary also remained positive, with strong request-for-proposal inflows from Big Pharma companies and healthy order-book visibility. Sai Life Sciences said more than 90% of its targeted FY27 revenue was already covered by orders in hand, while Anthem Biosciences had more than 80% order-book visibility.

Jefferies also upgraded Gland Pharma Ltd. from ‘Hold’ to ‘Buy’, citing stronger sales growth, better margins and an increase in the company’s FY27 sales guidance.

Jefferies on Sai Life Sciences: ‘Buy’

Sai Life Sciences remains one of Jefferies’ two top picks in India’s CRDMO sector. The brokerage has a target price of Rs 1,610 and sees 10.7% potential upside.

Sai Life Science Ltd. reported 24% year-on-year growth in its CRO business during the June quarter. Jefferies said the company also delivered a margin beat, with currency movement supporting the quarter’s performance.

More than 90% of the company’s targeted FY27 revenue was already covered by orders in hand, according to Jefferies. The brokerage also pointed to stronger client conversion and faster growth in peptides and antibody-drug conjugates.

Jefferies expects FY27 revenue to have a 40:60 split between the first and second halves of the year. The brokerage said this is broadly in line with the company’s historical pattern and could support more than 20% sales growth during FY27.

“90%+ order-book in hand for the FY27 target revenue. Stronger client conversion, ramping up faster in peptides/ADCs,” Jefferies said, citing management commentary.

Jefferies on Divi’s Laboratories: ‘Buy’

Divi’s Laboratories is Jefferies’ second top pick in the CRDMO segment. The brokerage has a target price of Rs 10,200 and sees 17.5% potential upside.

Divi’s CDMO business grew 50% year-on-year in 1QFY27. Jefferies said validation batches for major CDMO projects, new contracts and currency-related benefits supported the strong performance.

The brokerage expects the strong CDMO sales run rate to continue as validation batches that supported the June quarter are supplied in the coming quarters. Divi’s is also expected to sign a multiyear CDMO contract for a contrast media product in the next three to four months, according to Jefferies.

Several small-molecule and peptide projects are scheduled for launch over the next 12 to 18 months. Jefferies has raised its FY27 and FY28 revenue estimates for Divi’s by 3% and 2%, respectively, while its EBITDA estimates have been increased by 17% and 11%.

“FY27 double digit growth to continue. Shipments for validation batches for major projects have begun,” Jefferies said, citing Divi’s management commentary.

Jefferies on Gland Pharma: ‘Buy’

Jefferies has upgraded Gland Pharma Ltd. from ‘Hold’ to ‘Buy’ and set a target price of Rs 3,350. The brokerage sees 19.6% potential upside and said the key challenges facing the company are largely behind it.

Gland Pharma reported 20% year-on-year sales growth in 1QFY27. Jefferies attributed the performance to growth in the base business, currency-related benefits and margin gains.

The company also raised its FY27 sales growth guidance to 15% or higher in constant-currency terms, compared with its earlier guidance of 12%-13%. Jefferies said the higher guidance supports its positive view of the business.

The brokerage raised its FY27 and FY28 revenue estimates for Gland Pharma by 4% and 6%, respectively. Its EBITDA estimates were increased by 10% for FY27 and 11% for FY28.

“Gland increased FY27 sales guidance to 15% cc growth (vs 12-13% earlier),” Jefferies said.

Jefferies on Piramal Pharma: ‘Buy’

Jefferies has a ‘Buy’ rating on Piramal Pharma Ltd. with a target price of Rs 235 and potential upside of 13.5%. The brokerage said the company reported healthy growth across its CDMO and non-CDMO businesses in 1QFY27.

Piramal Pharma’s CDMO revenue increased 19% year-on-year during the quarter, supported by healthy order inflows across its sites. Currency movement also contributed to the reported performance, according to Jefferies.

The company maintained its FY27 guidance for low-to-mid-teens sales growth. Jefferies said management expects EBITDA and profit after tax growth to remain higher than revenue growth.

The brokerage raised its FY27 revenue estimate for Piramal Pharma by 1% and its FY28 estimate by 2%. Its FY27 EBITDA estimate was increased by 9%, while the FY28 estimate was reduced by 5%.

“Maintained guidance of Low- to mid-teens sales growth (in FY27) and EBITDA & PAT growth > revenue growth,” Jefferies said, citing management commentary.

Jefferies on Anthem Biosciences: ‘Buy’

Anthem Biosciences has a ‘Buy’ rating from Jefferies and a target price of Rs 1,050. The brokerage sees 20% potential upside, the highest among its five ‘Buy’-rated CRDMO stocks.

Jefferies said the June quarter was affected by the timing of shipments for key products, with those shipments scheduled from 2QFY27.

The company said more than 80% of its targeted CRDMO sales for FY27 were already covered by its order book. Jefferies included this order visibility among the positive management comments from the sector.

The brokerage’s estimates show a 21% FY26-FY29 EBITDA compound annual growth rate for Anthem Biosciences. It also estimates a 25% return on capital employed for FY26.

“Have 80%+ order-book (% of target sales) in hand for CRDMO division,” Jefferies said, citing Anthem Biosciences’ management commentary.

CRDMO stocks: Jefferies’ ‘Buy’ list

Stock	Rating	Target price	Potential upside
Anthem Biosciences	‘Buy’	Rs 1,050	20.0%
Gland Pharma	‘Buy’	Rs 3,350	19.6%
Divi’s Laboratories	‘Buy’	Rs 10,200	17.5%
Piramal Pharma	‘Buy’	Rs 235	13.5%
Sai Life Sciences	‘Buy’	Rs 1,610	10.7%

Source: Jefferies India CRDMO Performance Review.

Why Jefferies likes these CRDMO stocks

The June quarter marked a strong period for the CRDMO companies covered by Jefferies. Sector growth reached 19% year-on-year, compared with 9% in the March quarter. Jefferies said this was the highest growth rate in seven quarters.

Divi’s Laboratories, Laurus Labs and Gland Pharma were the largest contributors to sector growth during the quarter. Piramal Pharma and Sai Life Sciences also recorded strong performances.

Total sales for the companies covered by Jefferies increased 14% year-on-year in 1QFY27, while total EBITDA rose 36%. The brokerage said stronger CRDMO growth and margin improvement supported the increase.

Management commentary remained positive across several companies, with strong RFP inflows from Big Pharma companies and healthy order-book visibility. Jefferies said Sai Life Sciences and Divi’s Laboratories remain its top picks in the sector.

“Commentary remains bullish and indicates strong structural trends,” Jefferies said in the report.

Conclusion

Jefferies’ preferred CRDMO stocks are led by Sai Life Sciences and Divi’s Laboratories, while Gland Pharma has joined the ‘Buy’ list after its upgrade. Anthem Biosciences has the highest potm The brokerage’s positive view across these names is supported by stronger CRDMO growth, order visibility and encouraging management commentary.

Disclaimer: This article is based on Jefferies’ research report. The ratings, target prices, estimates and views mentioned are those of Jefferies and are provided for informational purposes only. This article should not be treated as investment advice. Investors should make their own assessment and consider their financial circumstances before making any investment decision. Investments are subject to market risks, and returns are not guaranteed.