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The Front Page 20250312

The document provides an overview of the Indian financial market as of March 12, 2025, highlighting key stock recommendations and market indices. It includes detailed data on government bonds, forex markets, and significant stock movements, along with insights into derivatives trading. The summary also covers sector performance and valuation metrics for various indices, reflecting the current economic landscape.

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z The Front Page

India | March 12, 2025

Winners & Losers

Since last expiry (27-Feb-2025)
Benchmark Indices Closing Returns (%) OI Chg (%)
Since last expiry (27-Aug-2020)
Nifty Index 22,498 (0.2) (5.3)
Bank Nifty Index 47,854 (1.8) 6.3

Best Performers CMP Returns (%) OI Chg (%) Inference Worst Performers CMP (Rs) Returns (%) OI Chg (%) Inference
Tube Investments 2,882 13.3 (10.3) Short Covering Indusind Bank 656 (37.3) 53.0 Short Buildup
Jsw Energy Ltd 514 12.0 4.3 Long Buildup Bse Ltd 3,810 (26.2) 17.6 Short Buildup
Solar Industries 9,765 11.9 24.1 Long Buildup Mcx India Ltd 4,686 (12.8) 13.0 Short Buildup
Pi Industries 3,354 11.3 (31.0) Short Covering Ashok Leyland 200 (11.3) 11.0 Short Buildup
Bharat Electron 277 10.4 (7.8) Short Covering Birlasoft Ltd 401 (10.9) 6.1 Short Buildup
Hindalco Inds 696 10.1 (18.6) Short Covering Kalyan Jewellers 422 (10.2) (8.3) Long Unwinding
Phoenix Mills 1,657 9.6 42.5 Long Buildup Info Edge 6,697 (9.3) (24.4) Long Unwinding
BSE/NSE – Bulk Deals
Company Name of Acquirer / Seller Transaction Date Buy /Sale Quantity Price (Rs) Deal Size (Rs m)
Infosys Limited Shruti Shibulal 11-03-2025 Buy 29,84,057 1,657.0 4,945
Infosys Limited Gaurav Manchanda 11-03-2025 Sell 29,84,057 1,657.0 4,945
Richa Info Systems Ltd Craft Emerging Market Fund Pcc- Elite Capital Fund 11-03-2025 Buy 48,000 52.0 2
Events Calendar – March 2025
Monday Tuesday Wednesday Thursday Friday Saturday
3 4 5 6 7 8

10 11 12 13 14 15

Jan – IIP
Feb - CPI Feb Import/Export
17 18 19 20 21 22

Feb – CPI (AL/RL)

24 25 26 27 28 29

Feb CPI (IW)

Black: Quarterly results, Blue: Economic data, Red: India Holiday

Events

Jan-Mar 25 Apr-Jun 25 Jul-Sep 25

Economics / • RBI’s Monetary Policy meeting | 5-7 Feb • RBI’s Monetary Policy meeting | May • RBI’s Monetary Policy meeting | Aug
Politics
• 3QFY25 Quarterly GDP • 4QFY25 Quarterly GDP • 1QFY26 Quarterly GDP
• India Budget | 1 Feb 2025

IIFL Events • IIFL EI Conference | Mumbai | 25-27 Feb IIFL Invest India Conference
London | 25-26 June

Auto • Auto volumes – 1day of the month • Auto volumes – 1day of the month • Auto volumes – 1day of the month
Sai Life Sciences – BUY Initiating coverage

12 March 2025

Integrated CRDMO model primed for growth Company update

Sai Life Sciences (Sai) is one of the largest integrated Indian
CMP Rs703 Price performance (%)
CRDMO players, offering both CDMO/CRO services through its
research labs in Hyderabad, Boston & Manchester and via its 570KL 12-mth TP (Rs) 825 (17%) 1M 3M 1Y
primary manufacturing facilities in Bidar & Bollaram. Sai’s Absolute (Rs) 3.6 0.0 0.0
Market cap (US$m) 1,678
differentiated, integrated CRDMO model enables it to conduct drug Absolute (US$) 3.2 0.0 0.0
discovery & development near its customers through its onshore Enterprise value (US$m) 1,649
Relative Perf. 10.7 0.0 0.0
labs and transfer technology for manufacturing back to India. While Bloomberg SAILIFE IN
the Indian CRDMO market is expected to grow at 14% Cagr over Cagr (%) 3 yrs 5 yrs
2023-28 aided by shifting geopolitics, Sai would benefit from its Sector Pharma EPS (Rs) 10.7 2.4
strong CDMO pipeline of 12 P-3 products, ramp-up in 8 tech transfer
Shareholding pattern (%) Stock performance
projects, and another 120 products across early phases. Apart from
adding new customers, Sai’s CRO growth will be aided by ramp-up Promoter 35.2 Shares Volume (LHS) (Rs)
Pledged (as % of promoter share) 2.7
in Schrödinger’s contract. With both the businesses primed for Price (RHS)
FII 38.5 60,000 800
growth, we expect Sai’s Revenue/Ebitda/EPS to clock 18/25/39% 50,000 750
Cagr over FY25-27ii. Initiate with a BUY (TP Rs825, 17% upside). DII 12.0 40,000 700
30,000
Integrated CRDMO platform facilitates multiple entry points: Sai’s 52Wk High/Low (Rs) 780/549 20,000 650
600
CDMO portfolio consists of 38 commercial & 12 P-3 products, of which 68% Shares o/s (m) 208 10,000
0 550
underwent development in Sai’s own R&D facilities before entering P-3 trials Del Value 3mth avg (US$ m) 8.1

Dec-24
Dec-24
Jan-25
Jan-25

Feb-25
Feb-25
Feb-25

Mar-25
& the remaining 32% were tech transferred to Sai’s manufacturing facilities. Dividend yield FY26ii (%) 0.0
This indicates Sai’s ability to both “follow the molecule” & absorb technology Free float (%) 64.8
quickly from customers, thereby providing multiple entry points to acquire
Financial summary (Rs m)
customers and offers a win-win solution for both Sai and its customers.
Y/e 03 Jan, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
Primed for growth across businesses: Sai’s CDMO growth will be driven Revenues (Rs m) 12,171 14,652 16,299 19,451 22,565
by scale-up in existing commercial products (28 end-market drugs), where Ebitda margins (%) 13.6 19.5 24.2 26.0 27.5
we expect Sai’s revenue per molecule to increase from USD3m to USD5- Pre-exceptional PAT (Rs m) 100 828 1,652 2,582 3,178
6m over the next 2-3 years. Additionally, Sai has 8 tech transfer projects Reported PAT (Rs m) 100 828 1,652 2,582 3,178
which can potentially add USD25-30m combined revenue in FY28, and 11-12
Pre-exceptional EPS (Rs) 0.5 4.4 7.9 12.3 15.2
P-3 molecules which can potentially add USD25-30m combined revenue in
Growth (%) 59.7 NM 79.6 56.3 23.1
FY29/30. For the CRO segment, growth will be driven by Schrödinger’s 5-year
IIFL vs consensus (%) 7.5 8.1 (10.1)
contract (USD22m), which could add 6-8% to Sai’s overall CRO revenue.
PER (x) NM 160.1 89.2 57.1 46.4
Expect return ratios to improve to mid-to-high teens over FY27-30: ROE (%) 1.1 8.9 10.9 11.8 12.9
Despite robust Ebitda-to-OCF conversion of 75%, Sai’s FCF generation and Net debt/equity (x) 0.5 0.5 (0.1) (0.1) (0.2)
return ratios have been weak owing to its asset turns (at ~1x) being 25-
EV/Ebitda (x) 79.8 48.2 36.3 28.3 22.9
30% lower than the median for other CRDMO peers. As capacity utilisation
Price/book (x) 14.3 13.6 7.1 6.3 5.6
improves, we expect Sai’s Ebitda margins to catch up with median level
OCF/Ebitda (x) 1.3 0.9 0.8 0.7 0.7
margins for peers (29-30% vs Sai’s 24%) by FY29/30 and its RoIC (post-
Source: Company, IIFL Research. Priced as on 11 March 2025
tax) to expand from 12% in FY25ii to 20% in FY30ii.
Rahul Jeewani Naman Bagrecha Vivek Pandey
rahul.jeewani@iiflcap.com naman.bagrecha@iiflcap.com vivek.pandey@iiflcap.com
91 22 4646 4673 91 22 4646 4718 91 22 4646 4651
Sai Life Sciences – BUY

Sai’s Integrated CRDMO platform facilitates Sai is one of the largest integrated CRDMO players in India, offering
end-to-end services across innovator drug discovery, development
multiple entry points to acquire customers and manufacturing value chain through its research labs in Hyderabad
(India), Boston (US) & Manchester (UK), and via its ~570KL primary
Sai Life Sciences (“Sai”) was founded by Kanumuri Ranga Raju (Sai’s manufacturing facilities in Bidar & Bollaram (India). Sai provided
Chairman) in Jan-1999. The company started with providing medicinal integrated CRO services to 60+ customers for their drug discovery
chemistry services in 1999 and later expanded its service offerings to programs in 1HFY25, while Sai’s commercialised CDMO product
include process research development services in 2002. Sai entered portfolio includes 38 APIs and intermediates used in the
the contract manufacturing services in 2004 with the acquisition of manufacturing of 28 commercial drugs. Discovery (CRO) and CMC
Prasad Drugs Limited (the current Unit III Bollaram facility of Sai), (CDMO) services accounted for ~40% and ~60% of Sai’s overall
followed by the acquisition of Merrifield Pharma (USFDA approved revenue for 9MFY25.
plant) in Bidar, Karnataka in 2006 (the current Unit IV Bidar facility of
Sai) for expanding its manufacturing capabilities. In 2019, Sai opened Sai has established strong capabilities across the CRDMO value chain
its first international R&D facility with a biology lab in Boston, US, and of drug discovery, development, and manufacturing, and the
in 2020, Sai opened its Chemistry R&D lab in Manchester, UK. Sai is company’s integrated CRDMO model provides several advantages,
the only Indian CRDMO company which has an onshore presence, including end-to-end support from discovery to commercialisation, as
offering both discovery and development services, through its onshore well as multiple entry points to acquire customers in intermediate
labs in Boston and Manchester. stages of their discovery-to-commercialisation journey.

Figure 1: Sai has an integrated CRDMO model with scaled operations across both CRO Figure 2: Discovery (CRO) and CMC (CDMO) services contributed ~40% and ~60% resp.
and CDMO verticals to Sai’s overall revenue for 9MFY25

CRO CDMO
100%

80%
61% 66% 60%
69%
60%

40%

20% 39% 34% 40%

31%

0%
FY22 FY23 FY24 9MFY25

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 2

Sai Life Sciences – BUY

Figure 3: Sai’s integrated CRDMO model provides several advantages, including end-to- Sai’s CDMO portfolio includes 38 commercialised CDMO
end support from discovery to commercialisation, as well as multiple entry points to products and 12 products in Phase III (including both
acquire customers in their discovery-to-commercialisation journey intermediates and APIs)

As of Sep-24, Sai has a portfolio of 50 “late phase” and commercial

products (undergoing Phase III clinical trials or completed Phase III
clinical trials), of which, 68% underwent development in Sai’s own
R&D facilities before entering Phase III clinical trials, and the
remaining 32% were transferred to Sai’s manufacturing facilities from
another facility. This indicates Sai’s ability to both “follow the
molecule” and absorb technology quickly from the customers or their
existing CDMO partner, providing multiple entry points to customers
and offering a win-win solution for both Sai and its customers. In
addition, Sai’s early phase portfolio consists of 120 products in various
stages of development across pre-clinical, Phase I, and Phase II
clinical trial stages.

Figure 5: The number of commercial molecules in Sai’s CDMO portfolio increased from
Source: Company, IIFL Research 22 in FY22 to 28 in 1HFY25, while its Phase III pipeline increased from 4 molecules in FY22
to 11 molecules in 1HFY25
Figure 4: Sai offers end-to-end CRDMO services through its research labs in Hyderabad, Number of Phase III (in progress or completed) molecules in the CMC
Boston & Manchester, and via its manufacturing facilities in Bidar & Bollaram in India portfolio
Number of commercial molecules in the CMC portfolio
40

10 11
30 9
4 6
20

26 28 28
10 22 22

0
FY22 FY23 1HFY24 FY24 1HFY25

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 3

Sai Life Sciences – BUY

Figure 6: More than 95% of Sai’s CDMO revenue comes from innovator pharma/biotech Sai has expanded its integrated CRO customer base from 29
companies customers in FY19 to 60+ customers in 1HFY25
Share of CDMO revenue from innovator companies Sai has provided CRO services for more than 200 small molecule
98% 97%
96% discovery programs over FY20-1HFY25. Out of these 200 programs, 5
96% have culminated in the approval of drugs that are now commercially
96% 95%
available in the market, and 40 programs resulted in Investigational
94% New Drug (“IND”) filings. The number of CRO customers served for
92%
integrated drug discovery programs increased from 29 customers in
90% FY19 to 60+ customers in 1HFY25. Out of the total scientific staff of
90% 2,353 in 1HFY25 for Sai, 1,092 scientific staff members (~46% of the
88% overall scientific staff) are engaged in offering CRO services.

86% Figure 8: Out of the 200 small molecule CRO discovery programs provided by Sai over
FY22 FY23 1HFY24 FY24 1HFY25 the past 5 years, 40 programs resulted in IND filings and 5 programs have culminated in
Source: Company, IIFL Research the approval of drugs that are now commercially available in the market

Figure 7: Sai has 38 commercialised CDMO products, 12 products in Phase III, and 120
products in early phase stage of product development 200
Small molecule
Stages of product development Number of Products for Sai
discovery programs
Pre-clinical
Ph-1 120
Ph-2 40
IND filings
Ph-3/Reg** 12
Commercial* 38
Source: Company, IIFL Research; Note: *Sai’s commercialised CDMO product portfolio includes 38
APIs and intermediates used in the manufacturing of 28 end-market commercial drugs, **Phase III 5
pipeline includes 12 APIs and intermediates which will be used in the manufacturing of 11 end-market Commercially
drugs
available
Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 4

Sai Life Sciences – BUY

Figure 9: Sai’s overall manufacturing capacity utilisation increased from 45% in FY22 to Figure 11: Sai’s CRO service offerings
60/65% in 1H/9MFY25

Unit III Bollaram Facility Unit IV Bidar Facility Overall

90%
80% 70% 69%
70% 64%
60%
60%
50% 45%
40%
30%
20%
10% 45% 45% 67% 70% 77% 63% 76% 69% 49% 62%
0%
FY22 FY23 1HFY24 FY24 1HFY25

Source: Company, IIFL Research

Figure 10: Representation of the entire CRDMO value chain
Figure 12: Sai’s CDMO service offerings

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 5

Sai Life Sciences – BUY

Sai has a clean track record of regulatory highlighted areas for improvement in Sai’s processes, such as
adherence to the customer’s requirements for maintaining
compliance, like most other CRDMO players documentation, risk assessment practices, system controls, and
storage and maintenance. During FY22-24, Sai has not faced any
Sai provides its CRDMO services through globally accredited termination of customer contracts on account of any observations
manufacturing and R&D facilities, with quality systems supported by raised by customers as part of their audits. Sai maintains an
a qualified pool of scientists, engineers, and other scientific staff. As independent quality assurance system that evaluates the
of Sep’24, Sai had 2,353 scientific staff, with the majority of Sai’s manufactured products, ensuring compliance with customer
scientific team holding advanced degrees, including 302 PhDs and specifications. Sai has not been informed of any latent defects over
1,475 master’s degrees. FY22-1HFY25 by its customers for the products manufactured and
supplied by Sai. Most contracts impose a time frame of up to 24
Sai has 3 primary research labs – 1) a 12-acre integrated R&D months for reporting latent defects.
campus in Hyderabad (Unit II Hyderabad Facility), which houses both
Figure 13: Sai has a clean track record of USFDA regulatory compliance
Sai's Discovery and CMC R&D teams, with 1,074/372 member
Discovery/CMC R&D teams resp., 2) a discovery biology lab in Boston, Fiscal Inspection
Legal Name City Classification Project Area
Year End Date
US with 21 scientific staff, and 3) a process R&D lab in Manchester,
UK with 65 scientific staff. Sai has 2 primary manufacturing Sai Life Sciences Voluntary Action Drug Quality
Bidar 2024 14-Jun-24
facilities – 1) Unit IV Bidar Facility, with a capacity of 525KL and 658 Limited Indicated (VAI) Assurance
scientific staff, which manufactures both APIs and advanced Sai Life Sciences Ranga Reddy,
2024 12-Apr-24
Voluntary Action Drug Quality
intermediates for regulated markets, and 2) Unit III Bollaram Facility, Limited Hyderabad Indicated (VAI) Assurance
with a capacity of 44KL, which manufactures both APIs and Sai Life Sciences
Bidar 2018 8-Jun-18
Voluntary Action Drug Quality
intermediates. Limited Indicated (VAI) Assurance
Sai Life Sciences Ranga Reddy, No Action Indicated Drug Quality
2016 7-Sep-16
Sai has maintained a flawless regulatory track record with no Official Limited Hyderabad (NAI) Assurance
Action Indicated/Warning Letter from USFDA. Sai’s recent USFDA Sai Life Sciences No Action Indicated Drug Quality
Pune 2016 12-Aug-16
audit in Apr-24 at its Unit II Hyderabad R&D facility, resulted in 1 Limited (NAI) Assurance
observation concerning its Laboratory Information Management Sai Life Sciences Voluntary Action Drug Quality
Bidar 2016 3-Jun-16
System (“LIMS”) and related verification processes, which has since Limited Indicated (VAI) Assurance
been resolved. Another USFDA audit of Sai’s Unit IV Bidar Sai Life Sciences No Action Indicated Drug Quality
Hyderabad 2016 4-Dec-15
manufacturing facility in Jun-24 resulted in 1 observation concerning Ltd. (Unit I) (NAI) Assurance
Sai’s adherence to its standard operating procedures, which also has Sai Life Sciences Voluntary Action Drug Quality
been addressed and USFDA has issued an EIR for the closure of the Bidar 2013 8-May-13
Limited Indicated (VAI) Assurance
inspection. Sai Life Sciences Voluntary Action Drug Quality
Hyderabad 2013 28-Mar-13
Ltd. (Unit I) Indicated (VAI) Assurance
During FY22-1HFY25, Sai’s manufacturing units have been Sai Life Sciences Voluntary Action Drug Quality
subject to more than 100 audits by its customers. None of these Limited
Bidar 2009 23-Apr-09
Indicated (VAI) Assurance
audits resulted in critical observations. The observations received Source: USFDA, IIFL Research

rahul .jeew ani @ii fl cap .c om 6

Sai Life Sciences – BUY

Sai has a differentiated delivery model through Figure 14: Sai’s Exploratory Discovery Biology Lab in Boston helps maximise
opportunities across the CRDMO value chain
its onshore labs in Boston and Manchester
Sai is the only CRDMO among the listed Indian peers that can conduct Boston Biology
drug discovery and development activities near its customers, and
transfer technology for manufacturing back to India. Sai has a
strategic presence near pharma/biotech innovation clusters with its
Boston Facility (CRO) and Manchester Facility (CDMO). The presence
India Biology
in these pharma/biotech innovation hubs facilitates access to the
latest research trends, a talented global workforce, and potential
collaboration within these innovation ecosystems. At the same time,
Sai’s facilities in India offer a cost competitive advantage for Integrated
conducting drug discovery research activities at scale, as well as for Discovery
development and large-scale commercial production of products.

Sai has been steadily growing its biology capabilities to complement CMC
its strong foundation in medicinal chemistry, DMPK, and toxicology,
supporting its customers across the entire drug discovery journey, Source: Company, IIFL Research
from target identification and validation to IND studies. In 2019, Sai
opened its first international R&D facility with a discovery In 2020, Sai opened a new Centre of Excellence in Process
biology lab in Boston, US. The Boston biology lab is designed to Chemistry R&D in Alderley Park, Manchester, to help accelerate
offer start-up and biotech companies in the region biology services to the NCE development programs of its global innovator customers. This
address exploratory and custom biology needs. Sai’s integrated centre has since grown to become a reliable partner to many innovator
delivery model for Biology aims to provide its clients an optimal companies across the world, providing high-quality chemistry, non-
solution in terms of expertise, speed, and cost. In this model, critical GMP delivery, and successful technology transfer to Sai’s
exploratory work involving close hand-in-hand collaboration with manufacturing sites in India for commercial scale-up. With growing
clients is done at the Boston lab. Established assays are then tech- interest from Sai’s customers for clinical API supplies from
transferred to Hyderabad R&D facility for greater throughput. A Manchester, Sai has set up a GMP Kilo Lab at the Manchester site. The
seamless and rapid technology transfer across sites is achieved new GMP Kilo Lab at Manchester enables the company to supply drug
through a unified global organisation and matching infrastructure substances and intermediates in gram-to-kilogram quantities,
across both locations. Sai’s discovery services support a wide range accelerating the delivery of products to meet customer clinical
of global innovator companies, from biotech start-ups to large pharma requirements. As part of the Bruntwood SciTech network, Alderley
companies, across a diverse set of therapeutic areas including Park has access to a range of companies across the pharma sector.
oncology, CNS, antivirals, and inflammation, among others. Alderley Park houses more than 60 established and 150 pre-
Currently, Sai’s Boston Facility has a specialised team of 21 scientific established companies. Currently, Sai’s Manchester Facility has a
staff. specialised team of 65 scientific staff.

rahul .jeew ani @ii fl cap .c om 7

Sai Life Sciences – BUY

Sai’s Unit II Hyderabad R&D facility houses a fully integrated 12- 8.6KL, and it was operating at 11.5% capacity utilisation in 1HFY25.
acre R&D campus for Discovery R&D, CMC process development and In addition to the above two units viz. Unit IV and VI of Bidar facility,
clinical phase manufacturing, with a 1,074 member Discovery services Sai also has another small 44KL manufacturing facility (Unit III
R&D team and 372 member CMC R&D team as of Sep-24. This facility Bollaram Facility), which manufactures intermediates and APIs. Unit
also has a pilot manufacturing plant (with 3KL capacity) and an III Bollaram Facility is GMP-certified by regional regulatory bodies. Sai
analytical testing and release laboratory, which have been inspected also had two other facilities, viz. Unit I LB Nagar Facility and Unit V
by the USFDA. Pune Facility, which ceased operations in 2019 and 2021, respectively.
Figure 16: Capacity utilisation across each of Sai’s manufacturing facilities
Figure 15: Sai’s Process R&D Lab in Manchester helps maximise opportunities across the
CRDMO value chain Sai's capacity (Liters per day,
FY22 FY23 1HFY24 FY24 1HFY25 9MFY25
except percentage)
Unit II Hyderabad Facility
Installed Capacity 2,863 3,673 3,383 3,423 3,473
Manchester PRD Actual Utilised Capacity 2,349 2,785 2,592 2,690 2,603
Capacity Utilisation % 82.1% 75.8% 76.6% 78.6% 74.9%

India CMC Unit III Bollaram Facility

(Development + Installed capacity 44,750 44,800 44,800 44,800 44,550
Manufacturing) Actual Utilised Capacity 20,046 29,825 34,495 33,893 21,836
Capacity Utilisation % 44.8% 66.6% 77.0% 75.7% 49.0%

India CMC
Unit IV Bidar Facility
(Manufacturing)
Installed capacity 409,920 409,920 435,250 435,250 469,450
Source: Company, IIFL Research Actual Utilised Capacity 185,641 286,853 273,257 298,226 290,032
Capacity Utilisation % 45.3% 70.0% 62.8% 68.5% 61.8%
Sai’s primary manufacturing facility is situated in Bidar, Karnataka
(Unit IV Bidar Facility) with an installed capacity of 525KL and Unit VI Bidar Facility
employs a team of 658 scientific staff as of Sep-24. The manufacturing Installed capacity NA NA NA NA 8,600
blocks in Sai’s Unit IV Bidar Facility are designed as multi-purpose Actual Utilised Capacity NA NA NA NA 994
production trains, which allows for quick changes across multiple Capacity Utilisation % NA NA NA NA 11.6%
production processes. This facility has received approvals following
audits conducted by the USFDA, PMDA Japan, and COFEPRIS Mexico,
Total Installed capacity 457,533 458,393 483,433 483,473 526,073 573,223
and it has undergone more than 250 audits by Sai’s customers, as of
Actual Utilised Capacity 208,036 319,463 310,344 334,809 315,465 372,595
Sep-24. Sai recently commissioned Unit VI Bidar Facility, which
manufactures APIs for oncology products with segregation and Capacity Utilisation % 45.5% 69.7% 64.2% 69.3% 60.0% 65.0%
Source: Company, IIFL Research
containment requirements. The installed capacity of this facility is just

rahul .jeew ani @ii fl cap .c om 8

Sai Life Sciences – BUY

Figure 17: Sai’s differentiated onshore and offshore presence amongst CRDMO peers
Indian Peers Global Peers
Company
Sai Syngene Aragen Suven Anthem Laurus Piramal Divi's Dishman Siegfried Cambrex Sterling Charles River
✓            ✓
Presence Presence
Offshore Onshore

Discovery
Development ✓      ✓  ✓ ✓ ✓ ✓ 
Manufacturing       ✓  ✓ ✓ ✓ ✓ 
Discovery ✓ ✓ ✓  ✓  ✓      ✓
Development ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓    
Manufacturing ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓   
Source: Company, IIFL Research

Figure 18: Sai’s annual CDMO revenue per litre (on actual utilised capacity) has remained Figure 19: Sai’s annual revenue/productivity per scientific staff in CRO services improved
in the range of Rs23-29K over the past 3 years from Rs4.4m in FY22 to Rs5.3m in 1HFY25, despite ~77% increase in its scientific staff for
the CRO services over FY22-1HFY25
Sai's annual CDMO revenue per litre on utilized capacity (Rs)
No. of scientists for Sai's CRO services (LHS, no.)
35,000 32,720
CRO revenue per scientist (RHS, Rs m)
28,620 29,018 5.3
30,000 1,200 5.3 5.4
24,733 24,332 23,814
25,000 22,846 5.2
1,000
20,000 5.0
800
4.8
15,000
600 4.4 4.6
10,000 4.4
400
5,000 4.2
200
0 4.0
617 934 1,092
FY22 FY23 FY24 1HFY24 2HFY24 1HFY25 9MFY25 0 3.8
FY22 FY24 1HFY25
Source: Company, IIFL Research
Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 9

Sai Life Sciences – BUY

Sai serves 18 out of the top 25 global pharma Additionally, Sai also provides services to mid and small-size
pharma/biotech companies. With greater access to capital, both
companies biotechnology and small pharma firms are increasingly outsourcing
services, especially discovery and development, to contract service
Sai has a well-diversified customer base, with no single customer providers. Sai is well positioned to capitalise on increasing outsourcing
accounting for more than 8% of the company’s overall revenue in from this segment. Sai served more than 280/230 innovator pharma
1HFY25, while Top-10 customers accounted for 43% of Sai’s overall and biotech companies in FY24/1HFY25 resp. across regulated
revenue in 1HFY25. Sai served 18 out of the top-25 global pharma markets, including the US, UK, EU and Japan.
companies in FY24, and this number has doubled vs. the number of
clients serviced in FY19 (9 companies). In our analysis of export Sai’s business development team consists of 16 experienced and
data, we identified 12-13 out of the 18 global pharma scientifically qualified professionals, of which 6 are in the US, 9 are in
companies served by Sai in FY24/CY24. In comparison for the UK and EU, and 1 member is located in Japan. Sai’s business
FY19, we identified 7 out of the 9 global pharma companies development team identifies new opportunities and continues to
which were served by Sai among the top-25 global pharma maintain local point of contact with customers throughout their
companies. Sai has also served more than 60 customers in relationships. Over FY22-1HFY25, Sai has added 3 large pharma
FY24/1HFY25 for their integrated CRO drug discovery programs, companies and 147 biotechnology companies to its portfolio.
which is an increase from 29 customers served in FY19.
Figure 21: List of Sai's CDMO clients among the top 25 global pharma companies, based
Figure 20: Sai has a well-diversified customer base, with no single customer accounting on our analysis of export data
for more than 8% of Sai’s overall revenue in 1HFY25 FY19 FY24 CY24
Roche AbbVie AbbVie
Sai's Customer Concetration (% of revenue)
Sanofi Merck & Co. Novartis
Largest customer (%) Top-5 customers (%) Top-10 customers (%) GSK Roche Merck & Co.
50% 46%
44% 44% 43% Eli Lilly Pfizer Roche
40%
40% Boehringer Ingelheim BMS Pfizer
31% 30% Bayer AstraZeneca BMS
28% 28% 28%
30% Astellas Pharma Sanofi AstraZeneca
20% GSK Sanofi
11% 10% 11% 10% Novo Nordisk GSK
8%
10% Eli Lilly Eli Lilly
0% Boehringer Ingelheim Boehringer Ingelheim
FY22 FY23 1HFY24 FY24 1HFY25 Bayer Bayer
Vertex
Source: Company, IIFL Research Source: Industry data, IIFL Research

rahul .jeew ani @ii fl cap .c om 10

Sai Life Sciences – BUY

Sai is also among one of the few CROs to have a dedicated R&D facility Figure 23: Sai has served more than 60 CRO customers in FY24/1HFY25 for their
for one of its customers, which demonstrates Sai’s ability to serve its integrated drug discovery programs, which is an increase from 29 customers in FY19
customers with a comprehensive set of capabilities and long-term
commitment. In 2023, Schrödinger chose Sai through the No. of CRO customers for Sai's Integrated Drug
request-for-proposal (RFP) process to establish a specialised Discovery program
integrated drug discovery R&D centre within Sai’s premises. 70
60
Sai has entered into a 5-year strategic CRO agreement with 60
Schrödinger, whose physics-based computational platform is 50
transforming the way therapeutics and materials are discovered, to
40
set up the Sai Schrödinger Research Laboratories (SSRL) in 29
30
Hyderabad, India. The agreement contains a minimum payment
obligation of USD21.8m over 5 years to be paid by Schrödinger 20
to Sai. The SSRL facility is Schrödinger’s first offshore research lab 10
and is a testimony to the advances Sai has made in the scale, scope 0
and depth of its integrated drug discovery capabilities. FY19 1HFY25
Source: Company, IIFL Research
The SSRL facility is dedicated to integrated discovery work streams,
including medicinal & synthetic chemistry, in vitro biology, and Figure 24: Sai’s average duration of relationship with its top-10 customers is 12 years
process chemistry. It will also access other Sai capabilities such as in
vitro ADME and in vivo PK as needed. The relationship will support Average duration of relationship with customers (in yrs)
advancement of programs that leverage Schrödinger’s validated
20 18
computational platform. The SSRL facility opened in Apr-2023 and
was staffed with 75 scientists across full-time-equivalent (FTE) in
15
Medicinal Chemistry, Biology, Process Chemistry, Analytical 13
12
Chemistry, and other support staff. As of Sep-24, the SSRL facility
is staffed with a dedicated team of 90 scientists. 10

Figure 22: Excerpts from Schrödinger’s Sep-2024 10-Q filing 5

“In December 2022, we entered into an agreement with a
third-party to establish an exclusive integrated drug discovery 0
dedicated facility in Hyderabad, India. The agreement contains Largest Top 5 Top 10
a minimum payment obligation, which totals $21.8 million
Source: Company, IIFL Research
over five years after the date of first occupancy.”
Source: Schrödinger Inc., IIFL Research

rahul .jeew ani @ii fl cap .c om 11

Sai Life Sciences – BUY

Figure 25: Our analysis of export data suggests that Syngene served 17 out of the top-25 Figure 26: Sai’s average revenue per customer has increased from Rs27m per customer in
global pharma companies in CY24 for the CRDMO segment, followed by Sai (13), Divi’s FY22 to Rs48.4m per customer in 1HFY25 (on an annualised basis)
(12), Piramal (12), Suven (7) and Neuland (7)
Top 25 Global Pharma Sai's no. of customers (LHS)* Billing per customer (Rs m, RHS)
Sai Divi's Suven Syngene Piramal Neuland
companies 400 60.0
Johnson & Johnon    ✓ ✓  350 44.5
48.4
50.0
AbbVie ✓ ✓   ✓ ✓ 300
Novartis ✓ ✓ ✓ ✓ ✓  33.5 40.0
250
Merck & Co. ✓ ✓  ✓   26.8
200 30.0
Roche ✓ ✓  ✓   150
20.0
Pfizer ✓ ✓ ✓ ✓ ✓  100
BMS ✓   ✓ ✓ ✓ 10.0
50 325 363 329 279
AstraZeneca ✓   ✓   0 0.0
Sanofi ✓ ✓ ✓ ✓ ✓ ✓ FY22 FY23 FY24 1HFY25
GSK ✓ ✓  ✓ ✓ ✓ Source: Company, IIFL Research; Note: * = The number of customers provided in the table above is
Novo Nordisk       computed based on the number of customer billing entities, which may include customers that are
Eli Lilly ✓   ✓   affiliated to each other. Furthermore, these numbers do not include Sai’s customers in clinical trial
phases or those who have completed a clinical trial phase and are awaiting further clearance for next
Takeda   ✓ ✓ ✓  phase of clinical trial from the regulators, as they did not generate revenue for Sai for the periods
Amgen    ✓   mentioned
Gilead Sciences      
Figure 27: Innovator business contribution as a % of overall revenue for Sai and its peers
Boehringer Ingelheim ✓  ✓ ✓  
Bayer ✓ ✓ ✓    Innovator mix as % of revenue (9MFY25)
Viatris    ✓ ✓ 
120%
CSL    ✓   100% 97%
Teva  ✓   ✓ ✓ 100%
Astellas Pharma  ✓     80%
Vertex ✓   ✓   53% 52%
60% 45%
Sandoz  ✓    ✓
Merck KGaA  ✓  ✓ ✓  40% 29%
Daiichi Sankyo   ✓  ✓ ✓ 20%
Total no. of CRDMO 0%
clients served among 13 12 7 17 12 7 Syngene Sai Life Suven Divi's Neuland Piramal
top-25 companies
Source: Industry data, IIFL Research; Note: Top-25 global pharma companies by sales in CY23 Source: IIFL Estimates

rahul .jeew ani @ii fl cap .c om 12

Sai Life Sciences – BUY

Sai – A well-established integrated platform Figure 29: Sai has 38 commercialised CDMO products, 12 products in Phase III, and 120
products in early phase stage of product development
primed for growth across CDMO and CRO Stages of product development Number of Products for Sai
businesses Pre-clinical
Ph-1 120
Sai’s commercialised CDMO portfolio consists of 38 APIs and Ph-2
intermediates used in the manufacturing of 28 commercial drugs, Ph-3/Reg** 12
including seven blockbusters (drugs with annual sales of over USD1bn Commercial* 38
in FY23). Additionally, Sai’s Phase III pipeline includes 12 products for Source: Company, IIFL Research; Note: *Sai’s commercialised CDMO product portfolio includes 38
11 molecules, that were either undergoing or had completed P-III APIs and intermediates used in the manufacturing of 28 end-market commercial drugs, **P-III pipeline
includes 12 APIs and intermediates, which will be used in the manufacturing of 11 end-market drugs
clinical trials. This portfolio of 39 end-market customer products in
1HFY25 (28 commercial drugs + 11 molecules that were either Figure 30: Phase-wise pipeline for Sai and its peers
undergoing or had completed P-III clinical trials) has grown from 26
Phase-wise pipeline Pre-clinical Ph-1 Ph-2 Ph-3 Pre-Reg/Reg Commercial
end-market customer products in FY22 (22 commercial drugs + 4
Sai Life 120 12 38
molecules that were either undergoing or had completed P-III clinical
trials) driven by sharp increase in P-III/Reg. products, which almost Suven 100+ 15 19
tripled over FY22-1HFY25. In addition, Sai also has a portfolio of 120 Piramal
118 (12 in pre-clinicals, 68
33
products in various stages of development across pre-clinical, Phase in P-1, and 38 in P-2)
I, and Phase II clinical trial stages. 60 (20 in pre-clinicals, 17
Neuland 7 11 19
in P-1, and 23 in P-2)
Figure 28: The number of commercial molecules in Sai’s CDMO portfolio increased from
Source: Company, IIFL Research
22 in FY22 to 28 in 1HFY25, while its Phase III pipeline increased from 4 molecules in FY22
to 11 molecules in 1HFY25 Scale-up in existing products and commercialisation of P-III
Number of Phase III (in progress or completed) molecules in the CMC pipeline will drive growth in Sai’s CDMO business
portfolio
Number of commercial molecules in the CMC portfolio Sai’s CDMO revenue is expected to grow at 14% cc Cagr over FY22-
40
25ii to reach revenue of USD120m, with the revenue split between
10 11 early-phase and late-phase/commercial supplies being one-third and
30 9
two-thirds respectively. This implies that Sai’s commercialised
6
4 portfolio of 28 end-market commercial drugs is currently contributing
20
USD3m revenue per molecule which is expected to increase to USD5-
26 28 28 6m revenue per molecule over the next 2-3 years. Growth in the
10 22 22
existing commercial portfolio will also be further complemented by (i)
ramp-up in 8 tech transfer projects, which can potentially add USD25-
0
30m combined revenue in FY28 and (ii) ramp-up in 11-12 P-III
FY22 FY23 1HFY24 FY24 1HFY25
molecules, which can potentially add USD25-30m combined revenue
Source: Company, IIFL Research in FY29/30.

rahul .jeew ani @ii fl cap .c om 13

Sai Life Sciences – BUY

Sai expects to continue the “follow the molecule” strategy through Figure 32: Sai’s Customer-wise Export data
MSAs with pharmaceutical/biotech companies, which provide Sai with Sai’s Export Data 9M Contri. to
an ongoing flow of early-phase products and grow its commercial FY21 FY22 FY23 FY24
(USD m) FY25 9MFY25 exports
portfolio by continuing to support the advancement of the early-stage Faes Farma 16.9 14.4 8.5 16.9 11.8 21%
products in its portfolio to late-phase and eventual commercialisation. Bayer 3.6 0.1 0.8 7.5 0.1 0%
United Therapeutics 3.9 4.8 6.5 5.0 5.2 9%
Pharma companies typically engage two manufacturers closer to Abbvie 2.2 1.4 1.5 4.2 5.8 10%
commercialisation or post commercialisation of the drugs to mitigate Zhejiang Raybow Pharma 1.4 0.0 0.6 2.1 0.0 0%
the risk associated with relying on a single CDMO supplier. Sai has Sanofi 0.1 0.8 1.8 1.9 1.2 2%
successfully completed technology transfers of 16 late-phase and Ajinomoto Omnichem 0.0 0.0 1.3 1.9 0.0 0%
commercial products in the last 3-4 years and Sai seeks to become a Boehringer Ingelheim 0.3 0.6 5.7 1.6 5.9 11%
partner of choice for customers looking for geographical Jilin Asymchem Labs 0.0 0.6 0.0 1.4 0.0 0%
diversification. Out of these 16 products, mgmt believes 8 products Roche 0.1 0.2 1.8 1.4 0.6 1%
can potentially add USD25-30m combined revenue in FY28. Zoetis 3.1 11.0 11.2 1.1 0.0 0%
Siegfried 1.3 0.9 1.2 0.9 0.0 0%
Approximately 28% of the combined total of 50 late-phase Taro 1.2 0.4 0.6 0.5 0.2 0%
(commercial and P-III) products, and 36% of the 120 early-phase Finorga 2.6 0.0 0.0 0.4 0.0 0%
products in Sai’s portfolio are APIs. 16 of these 50 late-phase products Wuxi 2.5 3.0 4.5 0.2 1.0 2%
were transferred to Sai’s manufacturing facility from another CDMO Patheon 0.1 0.9 2.4 0.1 0.0 0%
company facility. Novartis 0.0 0.0 0.0 0.0 0.0 0%
BMS 0.0 0.5 0.0 0.1 4.7 8%
Figure 31: 25-30% of Sai’s overall CDMO revenue is contributed by APIs
Merck & Co. 0.0 0.0 0.7 0.1 0.8 1%
API:Intermediate CDMO revenue mix (%) Pfizer 0.2 1.1 0.0 0.8 0.0 0%
API Intermediate AstraZeneca 0.0 0.0 0.0 0.2 0.0 0%
100% GSK 0.1 0.2 2.4 0.0 0.0 0%
80%
Eli Lilly 0.4 0.2 0.0 0.9 1.1 2%
50% Vertex 0.0 0.0 0.4 0.0 0.0 0%
72%
60% Hovione 0.4 0.0 0.4 1.0 1.3 2%
100% Top 25 customers 40.2 41.1 52.3 50.2 39.7 71%
40%
Top 25 customers contribution 71% 67% 75% 73% 71%
50%
20% Total Export shipments 56.8 61.0 69.7 69.2 56.0
28%
Source: Industry data, IIFL Research
0%
Sai Life Neuland Suven

Source: IIFL Estimates

rahul .jeew ani @ii fl cap .c om 14

Sai Life Sciences – BUY

Figure 33: Sai’s Product-wise Export data

9M Contri. to
Sai’s Export Data (USD m) FY21 FY22 FY23 FY24
FY25 9MFY25 exports
BILASTINE 16.6 15.6 10.0 17.8 12.7 23%
2-CYANOETHYL2R,3S,4R,5R-2-DIMETHOXYPHOSPHORYL METHOXY-5-2,4-DIOXO-3,4-DIHYDROPYRIMIDIN-1 2H-YL-4- ** 2.6 3.3 5.5 9.4 8.5 15%
3R-3-METHYL-4-4-2-METHYLPYRAZOL-3-YL-8-1HPYRAZOL-5-YL-1,7- NAPHTHYRIDIN-2-YLMORPHOLINE ELIMUSERTIB 2.8 1.8 4.2 6.4 2.0 4%
BENZINDENE 3.9 4.3 6.5 5.4 5.2 9%
S-2-S-6,8-DIFLUORO-1,2,3,4-TETRAHYDRONAPHTHALEN-2-YLAMINO-N-1-2-METHYL-1-NEOPENTYLAMINOPROPAN-2-YL-1H 0.1 1.5 0.6 4.6 2.1 4%
N-4-1-METHYL-1H-PYRAZOL-4-YL-BENZYL]-6-7-3-PYRROLIDIN-1-YL-PROPOXY-IMIDAZO 1,2-APYRIDIN-3-YL-PYRIMIDIN-4-YL- 2.3 3.6 0.9 3.8 1.1 2%
N-[6-1-HYDROXY-1-METHYL-ETHYL-2-2-METHYLSULFONYETHYLINDAZOL-5-YL]-6-TRIFLUOROMETHYLPYRIDINE-2-
0.0 0.1 1.5 2.5 2.5 4%
CARBOXAMIDE BAY-183
2S,3S,4S,5R,6R-2-2R,3R,5S,6R -4-2R,3S,4S,5R,6R-3-ACETOXY-4,5 -BISBENZYLOXY-6-BENZYLOXYMETHYL TETRAHYDRO 0.1 2.2 2.3 2.4 1.0 2%
S-3-HYDROXYTETRA HYDROFURAN 0.0 0.7 5.6 2.2 5.9 11%
6-AMINO-3-CHLORO-2-METHYLBENZENAMINIUM CHLORIDE ACT 674509B 1.3 0.0 0.9 2.1 1.2 2%
2R,5S-1-TERT-BUTOXYCARBONYL-5-2-4CHLORO-3-FLUOROPHENOXYACETAMIDO PIPERIDINE-2-CARBOXYLIC ACID BMT-
0.0 0.3 0.4 2.0 3.1 6%
669896-01
6-CHLORO-2,3-DIFLUOROBENZONITRILESQB-BENZONITRILE EX3RD SUC/RO7537948 0.3 0.7 0.0 1.8 0.9 2%
1-3,5-DICHLORO-4-FLUOROPHENYL-2,2,2-TRIFLUOROETHANONE CF3 KETONE 5.1 13.0 15.5 1.5 1.2 2%
3-AZANIUMYL-2,2BISAZANIUMYLMETHYLPROPYL-AMMONIUM TETRACHLORIDE NEOPENTYLTETRAAMINE HCL 0.0 0.0 0.3 1.0 0.3 1%
DAPSONE 5.0 1.3 1.0 0.8 0.5 1%
PROTEXIDINE DIHYDROPYRIMIDIN-DIHYDROPYRIMIDIN-YLMETHYLPROPANOIC ACIDDIHYDROPYRIMIDIN-Y LOT
0.9 0.1 1.7 0.6 0.8 1%
NO:PROTEXIDINE
N-1R,4R-4-ACETAMIDOCYCLOHEXYL-2-4-5-P-TOLYL-1,2,4-TRIAZIN-3-YLPIPERAZIN-1-YLACETAMIDE HYDROBROMIDE MLS-
0.0 0.0 0.6 0.6 1.2 2%
101
PHENYL 5-TERT-BUTYL ISOXAZOL-3-YLCARBAMATE ISOXAZOLE CARBAMATETAX DOCUMENT NO:EOU/23-24/4/0023 30-
0.2 0.0 0.1 0.6 1.0 2%
MAY-23
3-METHYLSULFONYLPYRIDIN-2-AMINE BMT-334526-01 0.0 0.0 0.1 0.5 0.1 0%
S-PROPANE-1 2-DIAMINE DIHYDROCHLORIDEM2E 0.0 0.0 0.0 0.4 0.0 0%
Top-20 products 41.3 48.5 57.6 66.5 51.3 92%
Top-20 as % of total 73% 80% 83% 96% 92%
Total Export shipments 56.8 61.0 69.7 69.2 56.0
Source: Industry data, IIFL Research

rahul .jeew ani @ii fl cap .c om 15

Sai Life Sciences – BUY

Increasing no. of CRO customers, ramp-up in Schrödinger’s Figure 34: Sai’s CRO revenue per CRO customer has more than doubled from Rs12.9m per
dedicated project, and recovery in biotech funding customer in FY22 to Rs32.7m per customer in 1HFY25 (on an annualised basis)
environment will drive growth in Sai’s CRO business No. of overall CRO customers Revenue per CRO customer (Rs m)
32.7
Sai’s Integrated Drug Discovery program CRO customers doubled 300 35.0
from 29 to 60 over FY19-1HFY25. However, during FY24/1HFY25, Sai 250 30.0
22.4
provided Discovery services to 222 and 176 overall customers resp.
25.0
Overall, Sai added 230 new CRO customers over FY19-24. Sai has 200 18.8
provided CRO services for more than 200 small molecule discovery 20.0
150 12.9
programs over FY20-1HFY25. Out of the 200 CRO programs, 5 have 15.0
culminated in the approval of drugs that are now commercially 100
10.0
available in the market, and 40 programs resulted in Investigational 50 5.0
New Drug (“IND”) filings. 213 249 222 176
0 0.0
FY22 FY23 FY24 1HFY25
Sai’s co-located technical competencies spans biology, chemistry and
DMPK services within its Unit II Hyderabad Facility where its scientific Source: Company, IIFL Research
services are conducted by a single CRO for time and cost efficiencies,
enabling an “integrated drug discovery” process for Sai’s customers. Sai seeks to increase average spending from existing CRO customers
Sai has biology capabilities both in the Unit II Hyderabad Facility and through deeper engagement and cross selling of its services. Over
the Boston Facility, which allows it to engage an increasing share of FY22-24, 32% of Sai’s revenue came from customers who availed
customers to co-locate their discovery activities with Sai. Through more than one of its CMC services (including early-phase development
Sai’s Boston Facility, Sai has developed and transferred over 20 and late-phase manufacturing services), while about 70% of Sai’s
biology assays that have enabled Sai to onboard new drug discovery CRO revenue came from customers who availed more than one of its
customers for conducting larger discovery programs in India. Discovery services (including chemistry, biology and/or DMPK
services). In 1HFY25, 38% of Sai’s revenue came from customers who
While Chemistry is the largest Discovery service Sai provides in terms availed more than one of its CMC services (including early-phase
of CRO revenue and laboratory capacity utilisation, ~75/83% of Sai’s development and late-phase manufacturing services) and
revenue from Chemistry services for FY24/1HFY25 resp. came from approximately 73% of Sai’s CRO revenue came from customers who
integrated customers who also availed Sai’s biology and/or DMPK availed more than one of its Discovery services (including chemistry,
services. Sai intends to increase its revenue from Discovery services biology and/or DMPK services).
by providing standalone chemistry, biology and DMPK services to new
customers acquired through the effort of the business development
teams located in the US, UK, EU and Japan.

rahul .jeew ani @ii fl cap .c om 16

Sai Life Sciences – BUY

Figure 35: Sai’s annual revenue/productivity per scientific staff in CRO services improved In addition to increasing penetration with existing customers, securing
from Rs4.4m in FY22 to Rs5.3m in 1HFY25, despite ~77% increase in its scientific staff for new customers is a key priority for Sai. Over FY22-1HFY25, Sai has
the CRO services over FY22-1HFY25 onboarded three large pharma companies and 147 biotechnology
No. of scientists for Sai's CRO services (LHS, no.) companies. These new partnerships have not only demonstrated Sai’s
CRO revenue per scientist (RHS, Rs m) strengths but have also opened opportunities for cross-selling and
upselling services. By delivering quality research and manufacturing
5.3
1,200 5.3 5.4 solutions, Sai aims to deepen these relationships, turning initial
5.2 contracts into long-term collaborations.
1,000
5.0
800
Apart from adding new customers, growth in Sai’s CRO business will
4.8 also be aided by (i) ramp-up in Schrödinger’s 5-year contract
600 4.4 4.6 (~USD22m cumulative revenue potential) with Sai, which could add
4.4
6-8% to Sai’s overall CRO revenue and (ii) industry tailwinds from
400 recovery in the biotech funding environment.
4.2
200
4.0 Sai also aims to capitalise on the increasing demand for integrated
617 934 1,092
0 3.8 Indian CRDMOs. Demand for Indian CRDMOs providing integrated
FY22 FY24 1HFY25 services is significantly increasing, driven by shifting geopolitical
factors that are significantly increasing, such as the “China Plus One”
Source: Company, IIFL Research
strategy, effect of the potential Biosecure Act, and Inflation Reduction
Act, among others. Given Sai’s ability to “follow the molecule” and
Figure 36: Sai’s annual revenue/productivity per scientific staff in CRO services is largely
provide multiple entry points to customers, we believe that Sai is well-
similar to that of Syngene, despite Sai’s CRO revenue base being one-sixth that of
positioned to leverage these industry trends and drive future growth.
Syngene
Moreover, the overall penetration of the global R&D outsourcing
Productivity per scientist (FY24) Sai Life Sciences Syngene*
services market increased from 37% in 2018 to 41% in 2023 and is
No. of scientists for research services 934 5,090 further expected to grow to 47% by 2028.
CRO revenue (Rs m) 4,972 27,909
CRO revenue (USD m) 60.1 337.2
CRO revenue per scientist (Rs m) 5.3 5.5
CRO revenue per scientist (USD '000) 64.3 66.2
Source: Company, IIFL Research; Note: * For Syngene, we have assumed research services revenue
to be 80% of total revenue for Syngene (excluded the Librela CDMO contribution) and attributed 90%
of Syngene’s total scientists for research services

rahul .jeew ani @ii fl cap .c om 17

Sai Life Sciences – BUY

Figure 37: The overall penetration of the global R&D outsourcing services market
increased from 37% in 2018 to 41% in 2023 and is further expected to grow to 47% by
2028

Outsourcing penetration in Overall R&D Spend, 2018-2028F

46.0% 46.6%
42.4% 43.6% 44.8%
41.1%
38.8% 40.0%
36.7% 37.4% 38.0%

2018 2019 2020 2021 2022 2023 2024E 2025F 2026F 2027F 2028F

Source: Company, IIFL Research

Figure 38: Cost comparison with US manufacturing due to outsourcing by region in 2023

Cost Comparison with US manufacturing due to Outsourcing by

Region, 2023 (Proportion of costs %)
100%

70%
60%
50%
40%

USA EU-5 Rest of EU APAC India

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 18

Sai Life Sciences – BUY

Figure 39: Biotech VC funding environment, after bottoming out in 1Q 2023 post the Covid highs, has now started to pick-up pace over the past 6-8 quarters
PE/VC Funding in Biotech, 2018-2024 (USD bn)
PE/VC Funding in Biotech, 2018-2024 (USD bn) Last 6 Yr. Avg Pre-Covid Avg
14.0 12.7 12.4 12.2
12.0 11.0
L6Y avg. : USD6.5bn 10.2
10.0 8.9
Pre-COVID avg. : USD3.9bn 7.6
8.0 6.5 6.7 6.8
6.0 6.5
5.3 5.0 4.7 5.0
6.0 4.3 4.8 4.3 3.7 3.7 4.6
3.9
4.0 3.0 2.7
2.0
0.0
Q1 2018

Q2 2022
Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024
Source: Company, IIFL Research

The average cost to develop and commercialise a new drug has Figure 40: Trend of average R&D Expenditure per approved drug
increased tenfold, from USD100mn in the 1970s to around USD1bn
R&D Expenditure per approved drug: 1970-2020
today. The success rate remains low, with only a small fraction of
experimental drugs, ranging from one in 10,000 to one in 15,000, Pre-human Clinical
USD1,300-
3000
successfully transitioning from preclinical trials to regulatory approval 3,000m
and commercialisation. Biotech and small pharma companies face 2500
resource constraints, often relying on venture capital (USD150bn in 2000
VC funding from 2018 to 2023). There is also an increasing focus on
reducing fixed expenses, which gives pharma companies greater 1500 USD1,000-
1,200m
flexibility to shift strategic and development priorities in response to 1000
USD400-
market conditions. At the same time, growing regulatory challenges, USD150-
450m
500 200m
such as the IRA and the potential Biosecure Act, have led to an
increasing preference for outsourcing in recent years. 0
1970s 1980s 1990-early 2000s 2000s-early 2020s

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 19

Sai Life Sciences – BUY

Figure 41: India CRDMO industry is expected to grow faster (at 14.0% Cagr over 2023-28) Figure 43: Indian CRDMO industry has largely been dominated by small molecules with
than the overall APAC CRDMO market (at 11.2% Cagr over 2023-28) their proportion constituting 90%+ of the total industry in 2023
Growth Rate of Global CRDMO Market by Region, 2018 - 2028F India CRDMO Market by Large and Small Molecules, 2018-2028F
CAGR(2018-2023) CAGR(2023-2028F) (USD bn)
15.0 14.1
Large Molecule Small Molecule 12.5
APAC Overall 11.4%
11.2% 10.8
9.4
India 12.6% 10.0 8.2
14.0%
7.3
6.4 12.8
China 19.7% 5.6 11.3
11.1% 4.9 9.8
4.0 4.4
5.0 8.6
6.7 7.5
Europe 5.3% 5.9
9.9% 4.7 5.2
3.8 4.2 1.0 1.2 1.3
0.5 0.6 0.7 0.8
8.8% 0.2 0.2 0.3 0.4
North America 7.0% 0.0
2018 2019 2020 2021 2022 2023 2024F 2025F 2026F 2027F 2028F

Source: Company, IIFL Research Source: Company, IIFL Research

Figure 42: Amongst the CRDMO value chain functions for India, pre-clinical development Figure 44: Indian Small Molecule Innovator API industry is expected to grow faster at
and clinical development & supplies are expected to grow at a significantly faster pace at 17.3% Cagr over 2023-28, as compared to Global Small Molecule Innovator API CDMO
15.7% and 14.7% Cagr respectively over 2023-28 expected to grow at 6.8% Cagr over 2023-28
Growth Rate of India CRDMO by Functions in comparison to India Small Molecule Innovator API CDMO, 2018 -2028F (USDbn)
Global CRDMO, 2023 - 2028F
CAGR(2018-2023) CAGR(2023-2028F) Global Small Molecule Innovator API CDMO (SAM)
60
India Small Molecule Innovator API Industry 51.3
Overall CRDMO 12.6% 48.1
14.0% 50 45.0
42.1
12.3% 40 36.9 39.4
Commercial Manufacturing 34.1
13.7% 29.2 30.3 32.5
27.4
Clinical Development and 30
13.8%
Supplies 14.7%
20
Preclinical Development 12.5% 5.2
15.7% 10 1.9 2.1 2.3 2.6 3.1 3.7 4.5
1.4 1.5 1.6
Discovery 10.3% 0
11.5%
2018 2019 2020 2021 2022 2023 2024F 2025F 2026F 2027F 2028F

Source: Company, IIFL Research Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 20

Sai Life Sciences – BUY

Forecast Sai’s Revenue/Ebitda/EPS to clock Figure 45: Sai’s CDMO revenue will likely grow at 14% cc Cagr over FY22-25ii and we
expect Sai’s CDMO revenue to grow at 16% cc Cagr over FY25-27ii, driven by scale-up in
18/25/39% Cagr over FY25-27ii, driven by its existing products, tech transfer projects, and commercialisation of P-III pipeline

robust pipeline and industry tailwinds CDMO Revenue (USD m) % growth

180 35%
29.0%
Sai’s overall revenue will likely grow at 18% cc Cagr (23% in INR 160 30%
terms) over FY22-25ii, driven by 14/25% cc Cagr in its CDMO/CRO 140
25%
business. With a well-established integrated CRDMO platform, we 120
believe both the CDMO and CRO businesses of Sai are primed for 100 13.7% 17.0% 16.0% 20%
growth over the next few years. We expect Sai’s overall revenue to 80 15%
grow at 16% cc Cagr (18% in INR terms) over FY25-27ii, driven by 60
10%
16/16% cc Cagr in its CDMO/CRO business resp. 40 2.0%
20 5%
80 91 117 120 140 162
Sai’s CDMO business growth of 16% cc Cagr (18% in INR terms) over 0 0%
FY25-27ii will be driven by (i) scale-up in existing commercialised FY22 FY23 FY24 FY25ii FY26ii FY27ii
portfolio of 28 end-market commercial drugs, where we expect Sai’s
Source: Company, IIFL Research
revenue per molecule to increase from USD3m to USD5-6m over the
next 2-3 years, (ii) ramp-up in 8 tech transfer projects which can
Figure 46: Sai’s CRO revenue will likely grow at 25% cc Cagr over FY22-25ii and we expect
potentially add USD25-30m combined revenue in FY28 and (iii) ramp-
Sai’s CRO revenue to grow at 16% cc Cagr over FY25-27ii driven by addition of new
up in 11-12 P-III molecules which can potentially add USD25-30m customers, scale-up in Schrödinger’s contract, & recovery in biotech funding environment
combined revenue in FY29/30.
CRO Revenue (USD m) % growth
Sai’s CRO business growth of 16% cc Cagr (17% in INR terms) over 120 70%
58.2%
FY25-27ii will be driven by (i) addition of new customers, (ii) ramp- 60%
100
up in Schrödinger’s 5-year contract (~USD22m cumulative revenue
50%
potential) with Sai which could add 6-8% to Sai’s overall CRO revenue 80
and (iii) industry tailwinds from recovery in the biotech funding 3.1% 40%
environment. 60
21.0% 30%
40 16.0% 16.0%
Sai recently expanded its existing manufacturing capacity by 100KL 20%
to ~570KL. While the existing manufacturing capacity can support 15- 20 10%
20% CDMO revenue growth over the next 2-3 years, Sai is also setting 37 58
60
73 84 98
0 0%
up an additional 100KL capacity at its Unit IV Bidar Facility which will FY22 FY23 FY24 FY25ii FY26ii FY27ii
get commissioned in 1QFY26 and will contribute to growth beyond
FY27. Overall capacity utilisation for Sai is 65% as of 9MFY25 and can Source: Company, IIFL Research
potentially improve to 80-85% capacity utilisation over the next 2
years.

rahul .jeew ani @ii fl cap .c om 21

Sai Life Sciences – BUY

Figure 47: In INR terms, Sai’s overall revenue will likely grow at 18% Cagr over FY18-25ii. Figure 48: Sai’s reported Ebitda margins declined from ~23% in FY20 to ~19.5% in FY24,
We expect Sai’s overall revenue to grow at 18% Cagr over FY25-27ii driven by 18/17% owing to negative operating leverage from incremental manufacturing capacity.
CDMO/CRO revenue Cagr over FY25-27ii Additionally, the Boston and Manchester onshore labs also depressed the reported
Ebitda margins by ~230bps in FY24
Overall Revenue (Rs m) % growth
25,000 40.0% 45% Ebitda margins (%) Ebitda margins (ex-UK/US labs) (%)
40% 26.0% 24.1%
34.6%
20,000 35% 24.0% 22.7%
21.8%
20.4% 30% 22.0%
15,000 22.7%
19.3% 25% 20.0% 21.7%
16.1% 16.0% 20%
10,000 14.4% 18.0% 16.3% 19.5%
4.4% 4.7% 11.2% 15%
16.0%
5,000 10% 13.3%
14.0%
5%
12.0% 13.9% 13.6%
0 0%
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25ii FY26ii FY27ii 10.0%
FY20 FY21 FY22 FY23 FY24
Source: Company, IIFL Research
Source: Company, IIFL Research
Sai’s reported Ebitda margins declined from ~23% in FY20 to ~19.5%
in FY24, owing to negative operating leverage from 170KL incremental With operating leverage led 330bps improvement in Ebitda margins
manufacturing capacity commissioned in FY20, CDMO scale-up being over FY25-27ii, we expect Sai’s overall revenue/Ebitda to grow at
muted during the Covid period, and lower demand during the Covid 18/25% Cagr over FY25-27ii. We expect PAT/EPS growth to be
period for Sai’s largest CDMO product (Bilastine, an antihistamine stronger at 39% Cagr over FY25-27ii on account of reduction in
product for allergy). Additionally, Sai’s Boston and Manchester interest costs, as Rs7.2bn out of IPO proceeds of Rs9.5bn have been
onshore labs had a combined Ebitda loss of 11% in FY24, which also utilised towards repayment of debt. Sai has already repaid Rs5.9bn of
depressed the reported Ebitda margins by ~230bps in FY24. Adjusted debt in Dec-2024 and the balance Rs1.3bn of debt repayment
for Boston and Manchester losses, Ebitda margins would have been happened in Jan-2025.
~22% in FY24 vs reported margins of 19.5%.

While Sai’s reported Ebitda margins have already improved to 22% in

9MFY25 vs 16% in 9MFY24, we expect operating leverage benefits
driven by scale-up in existing CDMO products, tech transfer projects,
commercialisation of P-III pipeline, ramp-up in Schrödinger’s CRO
contract, recovery in biotech funding environment, and moderating
losses from Boston/Manchester labs to further help improve margins
from 22/24% in 9MFY25/FY25ii to 27.5% in FY27ii. Mgmt’s guidance
is to improve Ebitda margins to 28-30% over the next 2-3 years.

rahul .jeew ani @ii fl cap .c om 22

Sai Life Sciences – BUY

Figure 49: With operating leverage led 330bps improvement in Ebitda margins over FY25-
27ii, we expect Sai’s overall revenue/Ebitda to grow at 18/25% Cagr over FY25-27ii
Robust Ebitda-to-OCF conversion of 75%,
Ebitda (Rs m) Ebitda margins (%) however FCF generation has been weak owing
7,000
24.9% 24.3%
26.0%
27.5% 30% to high capex
6,000 22.7% 21.7% 25%
5,000 19.5% Sai’s NWC cycle has improved, from 185 days in FY20 to 134 days in
17.1% 20% FY24, largely driven by 45/28 days reduction in receivable days and
4,000 13.9% 13.6%
15% other current assets which was partially offset by 22 days decline in
3,000 payable days. With more than 90% of Sai’s revenue coming from
2,000
10% exports, we believe Sai’s NWC cycle of 135 days is reasonable.
Increasing revenue share of the CRO business would have also helped
5%
1,000 Sai to improve its NWC cycle. Driven by an improvement in NWC cycle
0 0% over FY20-24, Sai’s Ebitda-to-OCF conversion improved from 70% in
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25ii FY26ii FY27ii FY20 to 92% in FY24. Sai’s Ebitda-to-OCF conversion has averaged
around 70-75% over the past 5-6 years.
Source: Company, IIFL Research

Figure 51: Sai’s NWC cycle has improved from 185 days in FY20 to 134 days in FY24 largely
Figure 50: Owing to the impact of leases, Sai’s pre-Ind AS Ebitda margins are ~440bps
driven by reduction in receivable days. Increasing revenue share of the CRO business
lower than its reported Ebitda margins for FY24/25ii
would have also helped Sai to improve its NWC cycle
Ebitda margins (%) Pre-Ind AS Ebitda margins (%) Days of sales FY19 FY20 FY21 FY22 FY23 FY24 FY25ii FY26ii FY27ii
30.0% 27.5%
26.0% Receivables 123 183 196 190 135 138 128 124 120
24.3%
25.0% 21.7% Inventory 23 22 37 53 42 22 22 22 22
19.5% Other current assets 46 54 56 57 46 26 30 31 32
20.0% 24.0%
22.1% Payables 56 72 66 84 63 50 50 52 54
13.9% 13.6% 19.8%
15.0% 17.1% Provisions 2 2 3 2 2 2 3 3 3
15.1% Net WCap days 134 185 220 214 158 134 127 121 116
10.0%
Source: Company, IIFL Research
9.8%
5.0% 8.3%
Although Sai’s Ebitda-to-OCF conversion has been robust at 70-75%
0.0% over the past 5-6 years, its FCF generation has been weak with only
FY21 FY22 FY23 FY24 FY25ii FY26ii FY27ii 2 years of positive FCF generation (FY23 and FY24) over the past 8
Source: Company, IIFL Research years, on account of high capex towards capacity expansion and
capability additions. While Sai’s FCF generation has been strong for
the past 2 years owing to better OCF generation due to improvement
in profitability and reduction in NWC days, we expect FCF generation
to be weak in FY25/26ii owing to high capex of Rs4.2/3.5bn in

rahul .jeew ani @ii fl cap .c om 23

Sai Life Sciences – BUY

FY25/26ii (towards capacity expansions and capability additions) With improving capacity utilisation, we expect Sai’s Ebitda
against OCF generation of Rs3.0/3.6bn in FY25/26ii resp. margins to catch up with median level margins for peers
(29-30%) by FY29/30
Figure 52: Although Sai’s Ebitda-to-OCF conversion has been robust at 70-75% over the
past 5-6 years, … We note that Sai’s asset turnover on gross block is relatively low at
OCF (Rs m) Ebitda-to-OCF conversion (%) ~1.0x, which is 25-30% lower than the median for other CRDMO
5,000 160% peers. Although Sai’s asset turnover has gradually improved from
133%
140% 0.85x in FY21 to 0.97x in FY24, we don’t expect any meaningful
4,000 120% increase in Sai’s asset turnover and estimate it to remain around 0.9-
92%
3,000 75%
86%
77% 75% 100% 1.0x over the next 3 years, given Sai will have incrementally added
70% 72%
55% 80% ~200KL manufacturing capacities over Nov-2024 to Jun-2025.
2,000 60% However, as capacity utilisation improves for Sai over the next few
40% years, we would expect Sai’s Ebitda margins to catch up with median
1,000 20% level margins for peers (29-30%) by FY29/30.
0 -22% 0%
-20% Figure 54: Sai’s tangible gross asset turnover is 25-30% lower than the median for other
(1,000) -40% CRDMO peers
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25ii FY26ii FY27ii
Tangible Gross Asset turnover (FY24) Ebitda margins
Source: Company, IIFL Research
2.50 38.6% 45.0%
Figure 53: … Sai’s FCF generation has been weak (only 2 years of positive FCF generation 29.7%
40.0%
viz. FY23 and FY24). We expect FCF generation in FY25/26ii to be weak owing to high 2.00 30.7% 35.0%
28.4% 29.0%
capex spends 30.0%
1.50 14.6%
FCF (Rs m) PAT-to-FCF conversion (%) 19.5% 25.0%
20.0%
2,000 1484% 2000% 1.00
15.0%
1,000 1500% 0.50 10.0%
0.97 1.20 1.26 0.75 1.34 2.16 1.23 5.0%
0 1000% 0.00 0.0%
Sai Life Divi's Suven* Syngene Piramal Neuland Median
(1,000) 500%
99% 6% 36%
-25% -39% -56% -66% Source: Company, IIFL Research; Note: * Suven ex-Cohance
(2,000) 0%

(3,000) -205% -500%

-487%
(4,000) -1000%
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25ii FY26ii FY27ii

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 24

Sai Life Sciences – BUY

Figure 55: As capacity utilisation improves for Sai over the next few years, we would Figure 57: Owing to margin pressures and low asset turns over FY19-24, Sai’s RoE declined
expect Sai’s Ebitda margins to catch up with median level margins for peers (29-30%) by from 13.5% in FY19 to 8.9% in FY24. We forecast Sai’s margins and asset turns to improve,
FY29/30 thereby leading to an improvement in RoE from 8.9% in FY24 to 12.9% in FY27ii
Ebitda margins (%) Tangible Gross Asset turnover (x) DuPont analysis FY19 FY20 FY21 FY22 FY23 FY24 FY25ii FY26ii FY27ii
1.40 1.31 35% EBIT Margins 18.5 15.2 11.2 3.6 5.4 11.3 15.7 17.3 18.3
1.13 1.14 Non. Op Effect 0.9 1.0 1.0 0.3 0.3 0.7 0.9 1.0 1.0
1.20 1.02 30%
0.92 0.97 0.95 Tax Effect 0.6 0.7 0.7 0.6 0.6 0.8 0.7 0.7 0.7
1.00 0.85 0.89 0.90 25%
0.78 Net Fixed Assets
1.7 1.2 0.9 0.8 1.0 1.2 1.1 1.2 1.2
0.80 20% Turnover
0.60 15% Equity Multiplier 0.7 0.8 1.0 1.2 1.3 1.3 0.9 0.8 0.7
RoE 13.5 10.1 7.4 0.7 1.1 8.9 10.9 11.8 12.9
0.40 10%
Source: Company, IIFL Research
13.9%
22.7%

21.7%

13.6%

19.5%

24.3%

26.0%

27.5%

28.5%

29.0%

30.0%
0.20 5%
0.00 0% Figure 58: We expect Sai to improve its RoIC from 9% in FY24 to 20% in FY30ii driven by
FY20 FY21 FY22 FY23 FY24 FY25ii FY26ii FY27ii FY28ii FY29ii FY30ii improving profitability and higher asset turns. Mgmt has also guided for RoE/RoCE target
of mid-to-high teens over the medium-term
Source: Company, IIFL Research
RoE (%) RoIC (post-tax, %)
25%
Figure 56: Given low asset turns of 0.9-1.0x, we believe capex spends will continue to 20%
remain high for Sai if the company targets to grow revenue by 15-20% Cagr 18%
20%
16%
Capex (Rs m) Capex as % of OCF 14% 15%
15% 13%
4,500 400% 12%
236%
4,000 136% 10% 9% 14% 15%
121% 122% 103% 69% 96% 75% 200% 10% 12%
14%
7% 13% 14%
3,500 32%
10% 11% 12%
3,000 0% 3% 9%
5% 8%
2,500 1%
6%
-200% 1%
2,000 0% 1%

FY23
FY18

FY19

FY20

FY21

FY22

FY24

FY25ii

FY26ii

FY27ii

FY28ii

FY29ii

FY30ii
1,500 -400%
1,000
-600% Source: Company, IIFL Research
500
-718%
0 -800%
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25ii FY26ii FY27ii

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 25

Sai Life Sciences – BUY

Management: Sai Life Sciences

Figure 59: Sai’s management organisation structure
Board of Directors

Krishna Raju
Kanumuri
Managing
Director & Chief
Executive Officer

Sauri Gudlavalleti Sivaramakrishnan Muniandi Chopperla Srikrishna

Chief Operations Chittor Damodharan Senior Vice President
Officer Chief Financial Officer Chief Quality Officer & Head of Safety

Dean David Runa Karan

Edney, Company
Senior Vice Secretary,
President & Compliance
Global Head – Officer and Legal
Process Head
Research &
Development

Rajesh Vinodrai
A Naik,
Vasanthamurugesh, Senior Vice
Senior Vice
President –
President – HR
Manufacturing and and
Technology Administration
Transfer

Tuneer Ghosh,
Senior Vice
President &
Head –
Business
Development
Chemistry,
Manufacturing
and Controls

Maneesh
Raghunath
Pingle,
Senior Vice
President &
Head - Business
Development
Discovery

Bugga Venkata
Naga Bala
Subrahmanya
Sarma, Senior
Vice President &
Head -
Discovery

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 26

Sai Life Sciences – BUY

Sai’s CRO business growth of 16% cc Cagr (17% in INR terms) over
Initiate with a BUY rating and TP of Rs825 FY25-27ii will be driven by (i) addition of new customers, (ii) ramp-
up in Schrödinger’s 5-year contract (USD22m cumulative revenue
Sai is the only CRDMO among the listed Indian peers that can conduct potential), which could add 6-8% to Sai’s CRO revenue, & (iii) industry
drug discovery and development activities near its customers through tailwinds from recovery in the biotech funding environment.
its onshore labs & transfer technology for manufacturing back to
India. Sai has a strategic presence near pharma/biotech innovation While the existing manufacturing capacity can support 15-20% CDMO
clusters with its Boston Facility (CRO) & Manchester Facility (CDMO). revenue growth over the next 2-3 years, Sai is also setting up an
The presence in these pharma/biotech innovation hubs facilitates additional 100KL capacity at its Unit IV Bidar Facility, which will get
access to the latest research trends, a talented global workforce, and commissioned in 1QFY26 and will contribute to growth beyond FY27.
potential collaboration within these innovation ecosystems. At the In 3QFY25, Sai also completed some land acquisitions, wherein Sai
same time, Sai’s facilities in India offer a cost competitive advantage has doubled the land area of the research centre in Hyderabad, bought
for conducting drug discovery research activities at scale, as well as land for another site in Hyderabad for manufacturing, and bought land
for development and large-scale commercial production of products. in Bidar to expand footprint. In addition to this manufacturing capacity
addition, Sai expanded the discovery R&D capacity in Hyderabad by
Sai also aims to capitalise on the increasing demand for integrated 15% for addition of lab spaces for chemistry and biology. Overall
Indian CRDMOs. Demand for Indian CRDMOs providing integrated capacity utilisation for Sai is 65% as of 9MFY25 and can potentially
services is significantly increasing, driven by shifting geopolitical improve to 80-85% capacity utilisation over the next 2 years.
factors that are significantly increasing, such as the “China Plus One”
strategy, effect of the potential Biosecure Act, and Inflation Reduction Sai’s reported Ebitda margins have already improved to 22% in
Act, among others. Given Sai’s ability to “follow the molecule” and 9MFY25 vs 16% in 9MFY24, and we expect operating leverage benefits
provide multiple entry points to customers, we believe that Sai is well- to further help improve margins from 22/24% in 9MFY25/FY25ii to
positioned to leverage these industry trends and drive future growth. 27.5% in FY27ii. As capacity utilisation improves for Sai over the next
Moreover, the overall penetration of the global R&D outsourcing few years, we would expect Sai’s Ebitda margins to catch up with
services market increased from 37% in 2018 to 41% in 2023 and is median level margins for CRDMO peers (29-30%) by FY29/30.
further expected to grow to 47% by 2028.
With operating leverage led 330bps improvement in Ebitda margins
We expect Sai’s overall revenue to grow at 16% cc Cagr (18% in INR over FY25-27ii, we expect Sai’s overall revenue/Ebitda to grow at
terms) over FY25-27ii, driven by 16/16% cc Cagr in its CDMO/CRO 18/25% Cagr over FY25-27ii. We expect PAT/EPS growth to be
business resp. Sai’s CDMO business growth of 16% cc Cagr (18% in stronger at 39% Cagr over FY25-27ii on account of reduction in
INR terms) over FY25-27ii will be driven by (i) scale-up in existing interest costs, as Rs7.2bn out of IPO proceeds of Rs9.5bn have been
commercialised portfolio of 28 end-market commercial drugs, where utilised towards repayment of debt. We initiate coverage on Sai with
we expect Sai’s revenue per molecule to increase from USD3m to a BUY rating and TP of Rs825, implying ~17% upside. Our TP of
USD5-6m over the next 2-3 years, (ii) ramp-up in 8 tech transfer Rs825 for Sai is based on ~31.5x FY27ii pre Ind-AS Ebitda and
projects which can potentially add USD25-30m combined revenue in ~27.5x FY27ii post Ind-AS Ebitda (at a ~15% discount to
FY28 and (iii) ramp-up in 11-12 P-III molecules which can potentially current average EV/Ebitda valuations for Divi’s and Suven).
add USD25-30m combined revenue in FY29/30. Our TP of Rs825 implies a target PE multiple of ~54x FY27ii EPS.

rahul .jeew ani @ii fl cap .c om 27

Sai Life Sciences – BUY

Figure 60: We expect Sai’s overall Revenue/Ebitda/EPS to clock 18/25/39% Cagr over Figure 61: We initiate coverage on Sai with a BUY rating, and value it at ~31.5x FY27ii pre
FY25-27ii. The stock is trading at ~23x FY27ii reported EV/Ebitda, at a ~30% discount to Ind-AS Ebitda and ~27.5x FY27ii post Ind-AS Ebitda (at a ~15% discount to current average
current average EV/Ebitda valuations for Divi’s and Suven EV/Ebitda valuations for Divi’s and Suven), to arrive at our TP of Rs825 per share
Valuation metrics FY25-27ii Target Price calculation (Rs m) 1-yr
FY23A FY24A FY25ii FY26ii FY27ii
(Rs mn) Cagr 2YF reported Ebitda (Mar'27) 6,205
Total revenue 12,171 14,652 16,299 19,451 22,565 18% Ind AS adjustment (Mar'27) 796
Growth 40.0% 20.4% 11.2% 19.3% 16.0% 2YF reported pre-Ind AS Ebitda (Mar'27) 5,409
EV/Operating revenue 11.8 9.8 8.8 7.4 6.4 Target EV/Ebitda multiple (x) 31.5
EBITDA 1,649 2,855 3,952 5,057 6,205 25% Target EV of base business 1,70,289
Growth 36.0% 73.1% 38.4% 28.0% 22.7% FY26ii Debt 0
EV/EBITDA 87.1 50.3 36.3 28.4 23.1 FY26ii Cash 2,773
Pre-Ind AS EBITDA 1,009 2,205 3,229 4,299 5,409 29% Target Equity value of base business 1,73,062
Growth 18.7% 118.6% 46.4% 33.1% 25.8% Shares outstanding (m) 210
Pre-Ind AS EV/EBITDA 142.3 65.1 44.5 33.4 26.5 Final Target Price (Rs) 825
EPS (excl. exceptionals) 0.5 4.4 7.9 12.3 15.2 39% Change from CMP 17%
Growth 59.7% 701.3% 79.6% 56.3% 23.1% Source: Company, IIFL Research
P/E 1283.1 160.1 89.2 57.1 46.4
Source: Company, IIFL Research
Figure 62: Our TP of Rs825 implies a target PE multiple of ~54x FY27ii EPS
Target Price calculation (Rs) 1-yr
2YF reported EPS (Mar'27) 15.2
Target P/E multiple (x) 54.4
Target Price of base business 825
Final Target Price 825
Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 28

Sai Life Sciences – BUY

Key risks
US tariffs: We believe there won’t be a 25% tariff on Pharma imports
into the US, and in the worst-case scenario, it can only be reciprocal
tariffs of 10% on Pharma products. Large Indian generic
manufacturers have highlighted that it is not going to be completely
borne by the manufacturers, and they will pass on the incremental
costs to the US channel/patients. Similarly, the CDMO companies are
also looking to pass on the costs to the innovator companies. 35-40%
of Sai’s overall revenue is contributed by CRO services, which will be
immune from tariffs.

PILLS Bill: Despite the production incentive of 30-35%, as well as

investment incentive of 25%, it doesn’t make any economic sense to
add incremental manufacturing capacities in the US, as the
manufacturing opex in the US is 4-6x of that in India. Also, setting up
a plant today and getting necessary regulatory approvals will take at
least 3-4 years, and by that time the current US government will be
nearing the end of its term.

Molecules going off-patent: Almost all of Sai’s manufacturing

revenue is currently derived from products that are supplied to
innovator pharmaceutical companies. As patents expire, there is a risk
that Sai’s customers may discontinue these products or lose market
share due to increased generic competition. There is one existing
molecule of Sai which will go off-patent in 2028, where Sai is
supplying an intermediate to the innovator along with another Chinese
player.

rahul .jeew ani @ii fl cap .c om 29

Sai Life Sciences – BUY

Figure 63: Comparative valuations for the Indian CRDMO players – Sai Life Sciences is trading at ~23x FY27ii reported EV/Ebitda, at a ~30% discount to current average EV/Ebitda valuations
for Divi’s and Suven
MCap EV CMP Revenue (Rs m) Rep. Ebitda (Rs m) FY25-27ii Cagr PER (x) EV/Ebitda (x)
Indian CRDMOs
(USD m) (USD m) (Rs) FY25ii FY26ii FY27ii FY25ii FY26ii FY27ii Revenue Ebitda EPS FY25ii FY26ii FY27ii FY25ii FY26ii FY27ii
Divi's Labs* 16,910 16,460 5,546 94,163 107,908 125,573 29,735 36,149 43,950 15% 22% 20% 67.7 57.6 46.8 48.2 39.6 32.6
Sai Life* 1,678 1,649 703 16,299 19,451 22,565 3,952 5,057 6,205 18% 25% 39% 89.2 57.1 46.4 36.3 28.4 23.1
Suven + Cohance* 5,175 5,173 1,156 25,357 32,309 39,417 8,875 10,985 13,993 25% 26% 27% 75.6 59.3 47.1 50.8 41.0 32.2
Syngene 3,150 3,053 683 37,216 43,136 50,248 10,760 13,088 15,773 16% 21% 24% 53.7 43.5 34.7 24.7 20.3 16.9
Neuland 1,650 1,629 11,201 15,438 20,404 26,193 4,103 6,610 8,847 30% 47% 52% 54.6 32.5 23.5 34.6 21.5 16.0
Piramal 3,071 3,523 203 93,043 106,940 123,280 14,506 19,024 23,413 15% 27% 115% 145.4 50.0 31.3 21.1 16.1 13.1
Laurus 3,546 3,865 573 55,166 64,317 74,770 10,559 14,465 18,465 16% 32% 63% 95.9 52.6 36.1 31.9 23.3 18.2
Blue Jet 1,629 1,587 818 10,052 14,367 16,602 3,582 5,322 6,269 29% 32% 17% 46.0 37.0 33.6 38.6 26.0 22.0
Aggregate (avg) ** 24.8% 27.1% 28.6% 17% 26% 33% 78.5 48.7 37.4 35.8 27.0 21.8
Source: Company, IIFL Research; Note: * Divi's, Sai and Suven are IIFLe, Rest are Bloomberg estimates; ** Ebitda shows aggregate Ebitda margins and FY25-27ii Cagr shows aggregate Cagr

rahul .jeew ani @ii fl cap .c om 30

Sai Life Sciences – BUY

Figure 64: IIFL’s Pharma Valuation matrix – We would prefer the Domestic Pharma names over Export Pharma players. Our top-picks in the Domestic Pharma pack are JB Pharma, Torrent
Pharma and Mankind, while amongst the Export Pharma pack we like Sun Pharma, Lupin and Aurobindo. Sai Life would be our preferred pick in the CRDMO space
CMP Mkt-Cap TP Upside/ Diluted EPS excl exceptionals FY25-27ii PE(x) EV/EBITDA (x)
Company name Reco
(Rs) (US$ m) (Rs) Downside FY24 FY25ii FY26ii FY27ii EPS Cagr FY25ii FY26ii FY27ii FY25ii FY26ii FY27ii
Sun Pharma 1,655 45,614 BUY 2155 30% 42.0 48.8 54.7 62.9 14% 33.9 30.2 26.3 25.1 23.3 20.9
Lupin 1,976 10,354 ADD 2300 16% 40.9 71.1 96.5 92.8 14% 27.8 20.5 21.3 16.9 13.4 14.4
Dr. Reddy's 1,117 10,701 REDUCE 1225 10% 66.8 65.9 68.9 51.8 -11% 16.9 16.2 21.6 10.2 9.8 13.0
Aurobindo 1,091 7,275 BUY 1590 46% 57.4 62.4 77.0 86.1 17% 17.5 14.2 12.7 9.1 7.8 7.2
Cipla 1,446 13,409 ADD 1625 12% 52.9 60.6 60.6 66.4 5% 23.8 23.8 21.8 14.8 15.0 14.3
Zydus Lifesciences 900 10,399 ADD 1060 18% 38.3 47.3 50.5 40.9 -7% 19.0 17.8 22.0 12.3 11.6 14.8
Gland Pharma 1,610 3,045 ADD 1650 3% 46.8 45.7 63.4 80.3 32% 35.2 25.4 20.1 18.2 14.5 12.2
Divi's Labs 5,546 16,910 REDUCE 5500 -1% 61.0 82.0 96.2 118.6 20% 67.7 57.6 46.8 48.2 39.6 32.6
Sai Life Sciences 703 1,678 BUY 825 17% 4.4 7.9 12.3 15.2 39% 89.2 57.1 46.4 36.3 28.4 23.1
Torrent Pharma 3,058 11,886 BUY 4020 31% 46.9 59.5 74.1 91.4 24% 51.4 41.3 33.5 27.3 24.1 21.3
Mankind Pharma 2,210 10,321 BUY 2850 29% 47.8 48.7 53.8 65.0 16% 45.4 41.1 34.0 29.5 23.7 20.6
Glenmark Pharma 1,400 4,538 ADD 1660 19% (3.5) 49.5 60.9 73.7 22% 28.3 23.0 19.0 16.0 13.6 11.6
Alkem 4,778 6,561 ADD 5700 19% 160.4 184.1 200.7 204.1 5% 26.0 23.8 23.4 20.6 18.7 16.3
Biocon 329 4,535 REDUCE 330 0% 1.2 (0.6) 5.3 8.4 NA NA 62.5 39.3 18.2 14.1 11.6
Alembic Pharma 806 1,820 ADD 1100 36% 31.3 29.1 40.4 52.3 34% 27.7 20.0 15.4 16.2 12.5 10.6
IPCA 1,294 3,770 REDUCE 1500 16% 24.8 35.9 44.7 55.2 24% 36.1 29.0 23.4 18.9 15.5 13.1
JB Pharma 1,568 2,795 BUY 2300 47% 35.2 42.5 54.4 67.7 26% 36.9 28.8 23.2 21.3 18.2 15.7
Eris Lifesciences 1,268 1,981 BUY 1550 22% 30.4 25.8 35.8 47.7 36% 49.1 35.4 26.6 18.0 15.9 13.9
Abbott India 30,500 7,443 SELL 28500 -7% 565.3 650.7 755.7 871.0 16% 46.9 40.4 35.0 36.2 31.5 28.2
Sanofi India 5,616 1,486 REDUCE 5800 3% 150.6 152.2 182.2 207.3 17% 36.9 30.8 27.1 25.1 21.5 18.8
Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 31

Company snapshot Sai Life Sciences – BUY

Background: Sai was founded by Kanumuri Ranga Raju (Chairman) in Jan'99. Sai started with medicinal chemistry services in 1999 and later in 2002
expanded its service offerings to include process research development services. In 2005, the company entered into contract manufacturing services with
the acquisition of Prasad Drugs Limited (the current Unit 3 Bollaram Facility), followed by acquisition of Merrifield Pharma (USFDA approved unit) in Bidar
in Karnataka in 2006 for expanding manufacturing capabilities. In 2019, Sai opened its first international R&D facility with a biology lab in Boston, USA
and in 2020, Sai opened Chemistry R&D lab in Manchester, UK. Sai provided CRO services to 60+ customers & its commercialized CDMO portfolio includes
38 APIs & intermediates.
Management
Rvenue Split - FY24 Overall capacity utilisation (%)
Name Designation
80.0% 69%
Krishna Raju Kanumuri MD & CEO
70.0% 60%
Sivaramakrishnan Chittor CFO 60.0% 45% 70%
50.0%
Sauri Gudlavalleti COO 40.0%
30.0%
CRO, 34%
20.0%
CDMO, 10.0%
66% 0.0%

FY22

FY23

FY24

1HFY25
Competition: Syngene, Suven, Divi's

Assumptions PE Chart EV/Ebitda

Y/e 03 Jan, Consolidated FY23A FY24A FY25ii FY26ii FY27ii 12m fwd EV/EBITDA Avg +/- 1SD
12m fwd PE Avg +/- 1SD
CDMO growth (%) 22.6 33.1 4.2 19.7 16.0
CRO growth (%) 70.7 6.4 23.6 18.7 16.0 72.0 36.0
(x) (x)
Others growth (%) 4,204.9 (117.6) (200.7) 20.0 20.0 34.0
69.0
EBITDA margin (%) 13.6 19.5 24.3 26.0 27.5
66.0 32.0
Tax rate (%) 39.1 24.2 25.2 25.2 25.2
Source: Company data, IIFL Research 63.0 30.0

60.0 28.0

57.0 26.0

54.0 24.0
Dec-24 Jan-25 Jan-25 Jan-25 Feb-25 Feb-25 Dec-24 Jan-25 Jan-25 Jan-25 Feb-25 Feb-25

rahul .jeew ani @ii fl cap .c om 32

Sai Life Sciences – BUY

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 03 Jan, Consolidated FY23A FY24A FY25ii FY26ii FY27ii Y/e 03 Jan, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
Revenues 12,171 14,652 16,299 19,451 22,565 Cash & cash equivalents 2,213 1,988 2,538 2,773 4,020
Ebitda 1,649 2,855 3,952 5,057 6,205 Inventories 1,395 874 978 1,167 1,354
Depreciation and amortisation (994) (1,194) (1,387) (1,696) (2,065) Receivables 4,491 5,530 5,705 6,613 7,446
Ebit 655 1,661 2,565 3,361 4,140 Other current assets 1,540 1,059 1,328 1,644 1,955
Non-operating income 280 291 368 340 358 Creditors 3,134 2,986 3,168 3,987 4,773
Financial expense (771) (859) (724) (250) (250) Other current liabilities 72 84 113 165 214
PBT 164 1,092 2,209 3,451 4,248 Net current assets 6,434 6,381 7,268 8,046 9,788
Exceptionals 0 0 0 0 0 Fixed assets 11,765 12,730 15,492 17,296 18,731
Reported PBT 164 1,092 2,209 3,451 4,248 Intangibles 114 138 138 138 138
Tax expense (64) (264) (557) (870) (1,071) Investments 0 0 0 0 0
PAT 100 828 1,652 2,582 3,178 Other long-term assets 348 433 433 433 433
Minorities, Associates etc. 0 0 0 0 0 Total net assets 18,661 19,682 23,331 25,912 29,090
Attributable PAT 100 828 1,652 2,582 3,178 Borrowings 6,992 7,102 0 0 0
Other long-term liabilities 2,787 2,828 2,828 2,828 2,828
Ratio analysis Shareholders equity 8,881 9,751 20,502 23,084 26,261
Y/e 03 Jan, Consolidated FY23A FY24A FY25ii FY26ii FY27ii Total liabilities 18,661 19,682 23,331 25,912 29,090
Per share data (Rs)
Pre-exceptional EPS 0.5 4.4 7.9 12.3 15.2 Cash flow summary (Rs m)
DPS 0.0 0.0 0.0 0.0 0.0 Y/e 03 Jan, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
BVPS 49.2 51.7 98.6 111.0 126.3 Ebit 655 1,661 2,565 3,361 4,140
Growth ratios (%) Tax paid (41) (139) (557) (870) (1,071)
Revenues 40.0 20.4 11.2 19.3 16.0 Depreciation and amortization 994 1,194 1,387 1,696 2,065
Ebitda 36.0 73.1 38.4 28.0 22.7 Net working capital change 349 (382) (336) (543) (496)
EPS 59.7 701.3 79.6 56.3 23.1 Other operating items 236 297 0 0 0
Profitability ratios (%) Operating cash flow before interest 2,194 2,631 3,060 3,645 4,639
Ebitda margin 13.6 19.5 24.3 26.0 27.5 Financial expense (544) (600) (724) (250) (250)
Ebit margin 5.4 11.3 15.7 17.3 18.3 Non-operating income (152) (789) 368 340 358
Tax rate 39.1 24.2 25.2 25.2 25.2 Operating cash flow after interest 1,498 1,242 2,703 3,735 4,747
Net profit margin 0.8 5.7 10.1 13.3 14.1 Capital expenditure (712) (1,808) (4,150) (3,500) (3,500)
Return ratios (%) Long-term investments 0 0 0 0 0
ROE 1.1 8.9 10.9 11.8 12.9 Others 0 0 0 0 0
ROIC ex goodwill 4.7 11.6 15.6 17.6 19.5 Free cash flow 787 (567) (1,447) 235 1,247
Solvency ratios (x) Equity raising 21 10 9,099 0 0
Net debt-equity 0.5 0.5 (0.1) (0.1) (0.2) Borrowings (897) 332 (7,102) 0 0
Net debt to Ebitda 2.9 1.8 (0.6) (0.5) (0.6) Dividend 0 0 0 0 0
Interest coverage 0.9 1.9 3.5 13.4 16.6 Net chg in cash and equivalents (90) (225) 550 235 1,247
Source: Company data, IIFL Research Source: Company data, IIFL Research

rahul .jeew ani @ii fl cap .c om 33

Standard Glass Lining – BUY
Initiating coverage

12 March 2025

Scaling up well to sustain growth Company update

CMP Rs141 Price performance (%)
Standard Glass Lining Technology (SGLT) has grown rapidly
(organic & inorganic) to become a leading equipment manufacturer 12-mth TP (Rs) 181 (28%) 1M 3M 1Y
for pharma & chemical sectors, backed by a strong manufacturing Absolute (Rs) (12.0) 0.0 0.0
Market cap (US$m) 322
setup and differentiated and well-rounded product offering. Absolute (US$) (12.4) 0.0 0.0
Strategic partnership with AGI Inc, Japan, expands the portfolio Enterprise value(US$m) 303
Relative Perf. (6.0) 0.0 0.0
with unique products for Indian and global markets, while that with Bloomberg SGLTL IN
IPP Global will aid faster ramp-up of exports. This, combined with Cagr (%) 3 yrs 5 yrs
foray into new segments such as O&G and heavy engineering, Sector Capital Goods EPS (Rs)
should aid 20%/26% revenue/PAT Cagr over FY24-27ii. We initiate
Shareholding pattern (%) Stock performance
coverage with BUY and TP of Rs181 (30x FY27ii PER).
Promoter 60.4 Shares ('000) Volume (LHS) (Rs)
Specialised engineering player for pharma & chemical sectors: Pledged (as % of promoter share) 0.0 Price (RHS)
60,000 250
Starting off in FY12, Standard Glass has grown rapidly and is now among FII 2.4
50,000 200
the top five specialised engineering equipment manufacturers for the DII 4.5 40,000 150
pharma and chemical sectors in India. This is backed by in-house 30,000
100
52Wk High/Low (Rs) 199/126 20,000
capabilities across design, engineering, manufacturing, assembly, 10,000 50
Shares o/s (m) 199
installation and commissioning, as well as establishing standard operating 0 0
Del Value 3mth avg (US$ m) 3.4

Feb-25
Feb-25
Feb-25
Feb-25
Jan-25
Jan-25
Jan-25

Mar-25
Mar-25
procedures for pharmaceutical and chemical manufacturers on a turnkey
basis. Strong delivery and execution have enabled ~90% of top 20 Dividend yield FY26ii (%) 0.0
customers of FY23 giving repeat orders in FY24. Free float (%) 39.6
Financial summary (Rs m)
Backed by a well-established manufacturing setup: SGLT’s healthy Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
growth over the past few years is backed by a robust manufacturing setup
Revenues (Rs m) 4,976 5,437 6,492 7,829 9,506
spread across eight facilities near Hyderabad. Capacities have expanded
steadily, led by multiple acquisitions, which have also expanded product Ebitda margins (%) 17.2 17.5 18.6 18.1 18.7
portfolio (PTFE pipes & fittings, stainless steel and nickel-based alloy Pre-exceptional PAT (Rs m) 534 603 781 994 1,201
equipment, vacuum pumps) for SGLT. The company continues to expand Reported PAT (Rs m) 534 603 781 994 1,201
capacities at new units to be able to cater to new segments such as O&G, Pre-exceptional EPS (Rs) 3.4 3.3 3.9 5.0 6.0
petchem, paints, and edible oils.
Growth (%) 105.9 -2 17.9 27.4 20.8
Right partnerships to expand TAM and aid growth: SGLT has PER (x) 41.7 42.5 36.0 28.3 23.4
partnered with AGI Inc, Japan (holds 10.5% stake in SGLT), which allows ROE (%) 47.6 21.4 13.7 12.7 13.4
it to offer unique advanced products such as conductive glass, glass lined Net debt/equity (x) 0.5 0.2 (0.4) (0.3) (0.3)
shell & tube heat exchangers and high-corrosion-resistant linings in India EV/Ebitda (x) 26.8 27.8 21.1 17.9 14.1
and globally for the pharma and chemical segments. It has also signed an
Price/book (x) 14.3 6.3 3.8 3.4 2.9
exclusive agreement with IPP Global, which will source SGLT equipment for
global customers and drive export revenue growth incrementally. OCF/Ebitda (x) NM NM 1.1 0.3 0.3
Source: Company, IIFL Research. Priced as on 11 March 2025
Anupam Gupta Mudit Bhandari
anupam.gupta@iiflcap.com mudit.bhandari@iiflcap.com
91 22 4646 4641 91 22 4646 4715
Standard Glass Lining – BUY

About the company Figure 2: Revenue mix by end user industries and line of business

Incorporated in 2012, Standard Glass (SGLT) has grown rapidly to

become one of the top five specialised engineering equipment
manufacturers for the pharmaceutical and chemical sectors in India.
Having started operations in 2013, SGLT now has a wide product offering
spanning 65 SKUs, through the organic and inorganic routes, to cater to
all the major needs for pharma and chemicals capex. Promoters, post
the recent IPO, own a 60.4% stake and have a strategic investment by
AGI Inc, Japan, which owns 10.5% stake in the company.
Figure 1: Brief history of the company
Year Particular Source: Company, IIFL Research
2013 Incorporated the Glass Lining Division.
2014 Sold 100 glass lined reactors. Figure 3: Key entities forming part of listed entity
Rev PAT
2016 Supplied first unique stainless steel glass lined reactor to Natco Pharma Limited. Company Holding % Business
share share
2018 Company hit a turnover of Rs500mn
Standard
2019 Finished construction of new facility of glass lining equipment at SGL Unit. Standalone listed entity, house glass lining
Glass Lining NA 38.5 44.0
equipment manufacturing
2021 Material Subsidiary was incorporated as a wholly-owned subsidiary. Technology
Material Subsidiary acquired metal business from M/s S2 Engineering Services S2 Manf. reactors, receivers, storage tanks,
2021 and pumps business from M/s Stanpumps Engineering Industries. Engineering 100.0 receivers, VTD, ANFDs and RCVDs and heat 57.4 52.1
Agreement with Climaveneta Climate Technologies Private Limited to enter the Industry exchangers and supply and servicing of pumps
2022 chillers market. Standard Manf. PTFE lined metal pipes, fittings, reactors,
51.0 5.5 2.8
2023 Investment from AGI Investors in the Company Flora valves
Standard Manf. heavy engineering products and
2024 Acquired Hyderabad-based C.P.K. Engineers Private Limited
engineering 100.0 receiver, reactor, rotary cone, vacuum dryer, (0.0)
Source: Company, IIFL Research
Solutions agitator Nutsche equipment and spares
SGLT offers critical equipment used in the manufacturing of Manf. assemble ANFD, Hastelloy equipment,
pharmaceutical and chemical products, including (i) reaction systems; (ii) CPK Engineers reactor, column and heat exchanger and other
51.0 - -
storage, separation and drying systems; and (iii) plant, engineering and Equipment equipment, fittings, instruments and
services (including other ancillary parts). This is backed by in-house accessories
capabilities across the entire value chain and strong capabilities in design, Source: Company, IIFL Research
engineering, manufacturing, assembly, installation and commissioning
solutions, as well as establishing standard operating procedures for
pharma and chemical manufacturing.

an u pa m.g u pta @ii fl c ap. c om 2

Standard Glass Lining – BUY

Figure 4: Board of directors and senior management Strong track record of delivery
Name Director
Non-Executive Chairman and Standard Glass delivered consolidated revenue Cagr of 50.5% over FY22-
Sambasiva Rao Gollapudi
Independent Director 24 (including gains from acquisitions) with a robust Ebitda margin of 17-
Nageswara Rao Kandula Managing Director, Promoter 18.5% and PAT margin of 10-11%. 9MFY25 delivery has been strong as
Kandula Krishna Veni Executive Director, Promoter well, with revenue up 30% yoy, Ebitda margin of 18.7% and PAT margin
of 11.7%. This has come through despite relatively subdued capex
Venkata Mohana Rao Katragadda Executive Director, Promoter
spends in the focus end segments of pharma and chemicals as the
Kandula Ramakrishna Executive Director, Promoter company has leveraged strong delivery capabilities and higher reliance
Sudhakara Reddy Siddareddy Independent Director on the pharma segment.
Yasuyuki Ikeda Non-Executive Director, AGI Inc Nominee
Radhika Nannapaneni Independent Director Figure 6: Revenue, Ebitda margin, PAT margin
Anjaneyulu Pathuri Chief Financial Officer.
Kudaravalli Punna Rao Executive Vice President, Manufacturing
Palayil Nanda Kumar Chief Marketing Officer, South India
Somanchi Datta Phani Prabhakar General Manager, Projects.
Radhakrishna Bandi Assistant General Manager, Purchase
Source: Company *see details in annexures

Figure 5: Shareholding pattern

Category Shareholding
Promoter 60.4%
Asahi, Monoform and GL Hakko (AGI Inc, Japan) 10.5%
Domestic mutual Funds 2.0%
Other Financial institution & Insurance Co 2.5% Source: Company, IIFL Research

FIIs 2.4%
SGLT has benefited from a combination of strong product offering
Others 22.3% covering the majority of capex needs for the pharma and chemical
Total 100.0% sectors and the robust ramp-up of production capabilities to achieve
Source: Company, IIFL Research desired qualities to meet the stringent compliance needs of the pharma
industry. SGLT offers
• End-to-end customised solutions
• Turnkey automated equipment solutions
• Capability to manufacture using various types of alloys with thickness
varying within 1-60mm for the food, pharma and chemical industries

an u pa m.g u pta @ii fl c ap. c om 3

Standard Glass Lining – BUY

Figure 7: SGLT has achieved healthy market share in all key equipment utilised by pharma Figure 9: Boasts of ~65 SKUs across three reported segments
and chemical industries

FY24 India mkt size LHS) SGLT mkt share

80
16.7%
70
60
50
10.4%
40
30
20 4.0%
10 3.0%
0 0.5%
Glass Lined Filters & dryers Vaccum pumps Reactors & Heat exchangers
equipment storage tanks

Source: Company, IIFL Research

Figure 8: Capabilities cover large part of core capex of pharma & chemical plant
Source: Company, IIFL Research

Figure 10: Revenue mix across the three segments

Source: Company, IIFL Research

an u pa m.g u pta @ii fl c ap. c om 4

Standard Glass Lining – BUY

Backed by a strong manufacturing base Figure 12: Manufacturing setup centred in Hyderabad
SGLT operates through eight manufacturing facilities spanning a built-
up/floor area of 400,000 sq. ft., strategically located in Hyderabad,
Telangana. It has the capabilities to manufacture reactors, receivers, and
storage tanks ranging 30-40,000 litres in size, with capacity to
manufacture around 300-350 equipment per month, including Reaction
Systems Storage, Separation and Drying Systems and Plants, and
Engineering and Services, apart from up to 100 reactors per month. It
has separate facilities to manufacture 30 ANFDs per month and 9,000
units per month of PTFE lined pipes and fittings.

Currently, the glass lined equipment manufacturing facility is witnessing

utilisation levels of 50% and provides ample capacity to drive supplies to
export markets where the company is ramping-up presence. Capacities
for other metallic vessels are operating at ~90% utilisation levels. The
company is accordingly adding one more unit spanning 100,000 sq. ft.
at S2 Unit 5 in Hyderabad, which is expected to start operations shortly.

SGLT has also acquired 36 acres of land in Hyderabad recently, which

will be used to set up a ~900,000 sq. ft. facility in phases to meet
expected needs as the company expands presence in the heavy
engineering segment incrementally.

Figure 11: Manufacturing base is spread across 9 units

Facility Equipment Area (sqft) Capacity (units pa)
Source: Company, IIFL Research
SGL Unit GLE 187,000 1609
S2 Unit 1 Stainless steel, Ni alloy reactors & ANFD 99,000 458 And steady ramp-up in customer relationships
S2 Unit 2 Stainless steel, Ni alloy F&D 38,000 380 Over the past decade, SGLT has created a diversified customer base
S2 Unti 3 Vacuum Pumps 18,000 440 including end users operating in a varied range of sectors across
pharmaceuticals, chemicals, paints, biotechnology, and food and
S2 Unit 4 Heat exchangers, heat transfer systems 42,000 684
beverages.
SFPL Unit PTFE lined pipes & fittings 35,000 90000
CPK Unit 1 Storage tanks, receivers, heat exchangers 17,000 180 It has long-standing relationships with 13 of its top 20 customers in
CPK Unit 2 Storage tanks, receivers, heat exchangers 6,000 60 excess of 3 years. These relationships and ongoing active engagements
allow SGLT to plan its capex and enhance its ability to benefit from
S2 Unit 5 Stainless Steel Ni Alloy equipment 100,000 Under construction
increasing economies of scale. The company has been able to obtain
Source: Company, IIFL Research
repeated orders from existing customers, with repeat orders from more
than 80% from the top 20 customers in each of the past three years.

an u pa m.g u pta @ii fl c ap. c om 5

Standard Glass Lining – BUY

Figure 14: SGLT has a stronger dependence on pharma sector vs chemicals, aided by a
Figure 13: List of key clients for SGLT Hyderabad-based setup and focus on building relationships

Pharma Chemicals Others

100%

80%

60%

40%

20%

0%
FY22 FY23 FY24 9MFY25

Source: Company, IIFL Research

Figure 15: Majority of top customers have given repeat orders to SGLT
Top 10 customer Top 20 customer
120%
100%
95%
100% 90% 90%
85%
80%
80%

60%

40%

20%

0%
FY22 FY23 FY24
Source: Company, IIFL Research
Source: Company, IIFL Research

an u pa m.g u pta @ii fl c ap. c om 6

Standard Glass Lining – BUY

Well-placed to capitalise on growing opportunity Glass lined equipment (GLE): This industry requires large initial
investments, technological know-how, R&D setup and skilled workforce,
Figure 16: SGLT has a large and growing TAM in India and globally making it tough for new entrants. Furthermore, the industry's existing
participants have an integrated value chain, making entry by new
Total TAM Standard Glass - FY24
companies much more challenging.
Global Market India Market
SG Revenue Market Share
Product Types Size ($ bn) - Size (INR bn) - Figure 18: Pharma and Chemicals capex uptick would be key to drive ~10% Cagr in the
(INR bn) %
CY2023 FY24 GLE market size from Rs11.5bn in FY24 to Rs18.6bn by FY29E. Standard Glass is the third-
Reaction Systems 76.12 114.51 3.08 2.7% largest player in the consolidated GLE market and has grown the fastest
Separation and Dying
17.45 33.12 1.64 5.0%
Systems
Plant Engineering &
14.00 30.0 0.71 2.4%
Services
Total 107.57 177.63 5.43
Source: Industry Data Source: Company, IIFL Research

Figure 17: Pharma capex is a key driver – should be led by demand for acute and chronic
treatment, anti-inflammatory medications, growth in formulations export and increasing
adoption of innovator drugs. Chemical sector capex is expected to see a gradual recovery

Source: Frost & Sullivan *Others include agriculture etc.

Filters and dryers: Filtration and drying are critical operations in a wide
range of industrial processes that involve the separation of solid matter
from solvent. The solid can then be discharged into the dryer in the same
equipment. The Indian F&D market is primarily driven by ANFD
technology as these provide consolidated equipment such as for filtration,
washing, and drying, making them increasingly popular in the
pharmaceutical industry for manufacturing generic pharmaceuticals.

Source: Company, IIFL Research

an u pa m.g u pta @ii fl c ap. c om 7

Standard Glass Lining – BUY

Figure 19: Chemicals and Pharma capex is also key to the expected ~12% Cagr for Filters SGLT has around 3% market share in the vacuum pumps market in India.
& Dryers market to reach Rs15.8bn by FY29 vs Rs9bn in FY24; SGLT has reasonable share SGLT was one of India's top three suppliers (in revenue terms) of
multistage claw vacuum pumps in FY24. It has an agreement with HHV
(part of Atlas Copco), under which HHV will produce vacuum pumps for
SGLT under a private label arrangement.

Reactors and storage tanks: Pressure vessels are containers designed

to hold gases, vapours, liquids, or two-phase fluids at pressures different
from the ambient pressure, equipped with provisions for heat introduction
or removal, while storage tanks are containers intended for storing liquids
or gases.

Growth would be led by integration into the smart manufacturing

processes, and strict safety regulation apart from increasing investments
Source: Frost & Sullivan *Others include process industries like O&G etc in oil and gas and power plant. This is a competitive market with more
than 15 players. Top 3 players account for 22% of market share led by
Vacuum pumps: Vacuum pumps help reduce the pressure resulting from strong market position due to strong regional presence, large client base,
the gas in a chamber. Expansion of the Indian vacuum pump market is and capacity to design solutions to meet unique customer needs.
led by increasing investment in the chemical, oil & gas, pharmaceutical,
semiconductor, and electronics industries. Growth is likely to be boosted Figure 21: The Rs68.7bn reactors and storage tanks market is much more diversified in
by policy assistance, as well as the estimated expenditure of US$12.5bn terms of end user markets. It is expected to grow at ~6.6%% Cagr over FY24-29 to reach
in oil and gas projects. Rs95bn size. SGLT is looking to grow its presence here, aided by new upcoming facilities
as it leverages capabilities to serve sectors such as O&G, paints, pigments
Figure 20: Vacuum Pumps market, India, split by end-user segment – FY24 size of
Rs14.7bn expected to grow at ~10% Cagr to reach Rs24bn by FY29

Source: Frost & Sullivan *Others include manufacturing etc

Source: Frost & Sullivan *Others include Electronics and Semiconductor, Automobile, Healthcare,
Pulp & paper, General Engineering, etc

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Standard Glass Lining – BUY

Heat exchangers: Increasing energy demand, emphasis on energy • Shell & tube glass lined heat exchangers, which improve heat
conservation, more stringent industry regulations, and strong growth in transfer efficiency and operational reliability. Products sold in India
the power-generation and chemical and pharmaceutical production will attract 4% royalty and those sold globally will attract 7% royalty
industries contribute to a positive outlook for the heat exchanger market payable to AGI Inc, Japan.
during the next few years. • Conductive glass (branded Stanglass) reactors, which provides
100% enhanced safety and lowers operational risks and maintenance
Figure 22: The Rs54bn heat exchangers market in India is expected to grow at ~8.9% Cagr, costs. The company would source the glass substrate from AGI Inc
driven by investments in chemicals, F&B, pharma and biotech sectors for manufacturing these products.
• High-corrosion-resistance glass reactors for semiconductor
industry with low leaching.

Increasing focus on exports through exclusive partnership

While consolidated revenue from operations grew at a Cagr of 50.45%
over FY22-24, SGLT has predominantly been focused on the domestic
market, with exports contributing to less than 1% of revenue in each of
FY22, FY23 and FY24. Given the large addressable market for its product
offering, it is focusing more on international markets by leveraging its
diverse product portfolio, customer acceptance in domestic markets and
end-to-end offerings for specialised engineering equipment. Apart from
growth, this would also aid profitability and mitigate risks associated with
Source: Frost & Sullivan *Others include Water and Wastewater, Mining, HVAC and Refrigeration,
economic fluctuations in any one region.
Steelmaking, Marine & Shipbuilding, General Engineering, Pulp & paper, Data Centres etc.

It has signed an exclusive agreement with IPP Global, an equipment

Expanding offerings and market presence to drive distributor with more than 165k clients worldwide and very recently with
growth Gale Process Solutions (an affiliate of IPP Global). IPP Global will be
responsible to sell SGLT equipment in all countries, barring India, Japan,
New unique offerings to strengthen presence Indonesia, the Middle East and Russia. It has also incorporated a new
Standard Glass counts AGI Inc, Japan (Asahi Glass and G L Hakko), as a subsidiary in the US to streamline exports. The process is expected to be
strategic investor, with it holding 10.5% stake in the company. This completed in 4Q, with gains from exports likely to reflect starting FY26.
strategic investment provides the company with technology to
manufacture and sell unique products in India, as well as globally. The Focusing on new segments to expand end market
strategic relationship includes (a) being suppliers to each other for Apart from the existing core end industries of pharma and chemicals, the
components supplied from India to Japan, and vice versa; (b) providing company is looking to broaden offerings for other sectors that require
assistance to promote final products in respective countries; (c) reactors, pressure vessels and storage tanks. These include O&G
cobranding in some geographies; (d) quality and cost improvement; and (including petro chemicals), heavy engineering, edible oils, flavours &
(e) accessing each other’s sales networks globally. fragrances and paints & coatings. Products here are similar but can have
higher thickness and larger sizes/tonnage.
The key new products through this partnership include

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Standard Glass Lining – BUY

The under-construction S2 Unit 5 spanning over 100,000 sq. ft. in such as O&G, heavy engineering, edible oil, flavours & fragrances,
Hyderabad is targeted towards this. This facility will focus on stainless paints and coatings.
steel and alloy steel vessels. The company also has 36 acres of land • Increased thrust to exports under (i) products under partnership with
available in Hyderabad, which can house a much larger 900,000 sq. ft. AGI Inc; and (ii) exclusive distribution partnership with IPP Global.
facility to be built in phases.
We expect Ebitda margin to be stable at ~18%, with growth in higher-
Targeting strategic acquisitions and alliances margin export business likely to offset the possible pressure as the
SGLT intends to explore and consider opportunities that can create company expands revenue from non-pharma/-chemical sectors.
synergies between the proposed target companies and them and are also
in line with the growth strategy. In the recent past, it acquired the Figure 23: We expect healthy 20% revenue growth to sustain over FY24-27; margins are
business undertaken by Higenic Flora Polymers and Yashasve Glass Lining likely to remain stable
Industries, both of which, are engaged in the business of manufacturing,
supplying, installing and repairing PTFE lined pipes and fittings. SGLT has
also acquired the business of C.P.K Engineers Private Limited, to
complement its existing production capabilities. SGLT had entered an
agreement with HHV for supply of vacuum pumps, along with a private
label arrangement, and it has a tie-up with GL Hakko for the glass lining
division.

Incrementally, it will target entities that expand opportunities in other

end markets and geographic regions with new customers and products.
It will focus on the skills of the management team, operation scale,
technological capability, product portfolio, customer base, end-market
exposures, valuation and estimated costs, as well as cultural fit, while
evaluating these targets.
Source: Company, IIFL Research

We forecast 26% PAT Cagr over FY24-27ii PAT growth would be slightly faster at ~26% supported by minimal
increase in finance charges amid a stronger balance sheet post the IPO
Even as the key end markets of pharma and chemical see a gradual uptick even as depreciation charge sees an increase, led by the ongoing and
in capex spends, we expect SGLT to deliver healthy 20% yoy growth in planned capex of ~Rs1bn over FY24-27. We have not assumed any major
revenue over FY24-27ii. The company has already delivered 33% yoy reduction in working capital cycle even as management believes a more
revenue growth in 9MFY25. Key drivers for this include sustainable level should be ~150 days. This is still much higher than the
• Introduction of new unique products (highlighted earlier) under the larger peer GMM Pfaudler, which operates at ~70 days. HLE Glascoat has
partnership, with AGI Inc including conductive glass lined equipment, operated at ~150 days in the past few years.
glass lined shell and tube heat exchangers and high-corrosion-
resistance vessels.
• Foray in the broader heavy engineering segment domestically, backed
by the new facility in Hyderabad. This will serve new end segments

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Standard Glass Lining – BUY

Figure 24: Faster PAT growth led by strong balance sheet post IPO Figure 26: Return ratios to trend up gradually on a an expanded networth post IPO

ROE ROCE

40%
35%
30%
25%
20%
15%
10%
5%
0%
FY22 FY23 FY24 FY25ii FY26ii FY27ii

Source: Company, IIFL Research Source: Company, IIFL Research

Figure 25: Working capital days Balance sheet is already net cash post the recent fund-raise in the IPO.
FY22 FY23 FY24 FY25ii FY26ii FY27ii We expect this and internal cash generation to be sufficient to meet the
Inventories days 191 105 151 151 151 151 incremental capex needs indicated so far. Again, a reduction in the
working capital cycle would present upside risk. Overall, this would
Trade receivables days 125 67 104 104 104 104
provide enough cushion to support possible acquisitions to expand
Other current assets days 45 17 85 22 22 22 capabilities and end markets similar to past few years.
Payables days 95 55 60 60 60 60
Provision days 1 1 1 1 1 1 Figure 27: Healthy profit, normalised working capital to drive positive cash flows
Other current liab days 144 23 24 24 24 24
Total NWC days 121 110 256 193 193 193
Source: Company, IIFL Research

Return ratio historically has been strong at ~16% ROCE and 15% ROE in
FY24. This would fall in FY25 post the fund raise of Rs2.5bn before
witnessing a gradual rise over FY26/27 as capacity utilisation ramps up.
If the company is able to achieve the lower indicated working capital
levels, there would be further upside to the return ratios vs IIFL
estimates.

Source: Company, IIFL Research

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Standard Glass Lining – BUY

We arrive at our target price of Rs181, assigning a PER multiple of 30x to

FY27 EPS. The multiple is slightly higher than the current one-year
forward PER for SGLT. Current one-year forward PER for SGLT is similar
to that for its larger peer GMM Pfaudler (on consensus estimates) and is
at a significant discount to established heavy engineering players such as
Anup Engineering and Thermax. Multiple re-rating for SGLT would be
driven by visible traction in newer segments and in exports, as well as on
stronger capex spends in the pharma and chemical sectors.

Figure 28: Valuation summary

Rs
FY27 PAT (Rs m) 1,201
Target PER (x) 30
Equity value (Rs m) 36,040
No of shares (m) 199
Target price 181
Source: Company, IIFL Research

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Standard Glass Lining – BUY

Annexures
Figure 29: Comparison with peers
Standard Glass GMM Pfaudler HLE Standard Glass GMM Pfaudler HLE
Glascoat Glascoat

Product Reaction system System and process (12% Filtration Acquisition 2021 – S2 Engineering – Dryer, 2020 - De Dietrich Process 2017 – Swiss
(56.71%/61.25% Rev FY24/23) revenue) filter, heat exchanger Systems India – Glass Lined Glascoat –
portfolio Drying
-Heat Transfer System Stanpumps Engineering – 2021 – HDO Technologies – Glass lined
-Reaction system Glass lined
multistage claw, vacuum pump alloy process equipment 2021 –
-Pipes and Fittings -Evaporation and distillation equipment
-Pumps 2023 – Yashasve Glass – PTFE 2022 – JDS Manufacturing – Thaletec –
system exotic
-Reactors pipes Glass lined Glass lined
-Acid Recovery metal Higenic Flora - PTFE pipes Hydro Air Research – 2023 –
Separation and drying system -Filtration and drying system fabrication
(30.08%/30.97% Rev FY24/23) 2024 – CPK Engineers – ANFD, Membrane technologies Kinam –
-Absorption system custom Nickel alloy equipment, Reactors 2023 – Mixpro - Mixing Heat
-Filtration and Drying jobs
-Extraction system technology Exchanger
-Storage
-membrane separation system Mixel - mixing technology
-Vessels
Plant engineering and service Technology (60% revenue)
(13.21/7.78% Rev FY24/23) -Glass lined
-Services -Lab and process glass Export Currently negligible but focused 70%+ from export ~4% in FY24
-Utility system -Filtration and drying upon expanding
-mixing technology
Source: Company, IIFL Research
-sealing technology
-alloy process equipment
Figure 30: Comparison of India business of peers
-fluoropolymers
Revenue Ebitda
Services (28% revenue)
FY22 FY23 FY24 FY22 FY23 FY24
Differentiat Turnkey solution, STANGLASS, Mixing technology, Recently
ed product Shell and tube heat exchanger, entered Standard Glass 2,402 4,976 5,437 16.8% 17.2% 17.5%
Extended Nozzles, PTFE lined heat HLE Glass coat 5,418 6,156 6,573 22.7% 20.5% 17.4%
pipes and fittings, Vacuum exchanger GMM Pfaudler 6,596 8,986 8,455
Pumps Source: Company, IIFL Research
Location Hyderabad Karamsad, Hyderabad, Maroli,
Ahmedabad, China, Germany, Anand,
Italy, France, UK, Switzerland, Silvassa,
USA, Brazil, Canada Germany,
Ambernath
Pharma 81.79% in FY24 41% FY24
Revenue 82.8% in FY23

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Standard Glass Lining – BUY

Figure 31: Unique product offering for SGLT Figure 32: Board of directors
Product Particulars Name Remarks
To combat ignition and explosions caused by sparks during the production of Non-Executive Chairman and Independent Director. Associated with
raw materials that generate static electricity, Stanglass suppresses ignition Sambasiva Rao the company since May’24. He is an Associate member at the Institute
Stanglass
and explosion problems. This is through purchase agreement with GL Hakko Gollapudi of Chartered Accountants of India. He has professional experience
and Asahi for procurement of certain grade of specialised glass. of over two decades.
To meet the customer challenge of stains forming on glass lining of reactors, it Managing Director. Holds a Diploma in Business Management with
No Stain
developed a type of glass, called ‘No Stain Glass’, which effectively prevents Nageswara Rao specialisation in finance management from the Indian School of
Glass
these stains from forming. Kandula Business Management and Administration. He has professional
Only manufacturer of glass lined shell and tube heat exchanger in India. The experience of over 10 years.
Shell and
shell and tube heat exchanger features advanced corrosion-resistant Executive Director. Holds a master’s degree in business administration
tube heat Kandula Krishna
technology which effectively combats corrosion, significantly enhancing the from the Indian School of Business Management and Administration.
exchanger Veni
longevity and reliability of the heat exchanger. SGLT has filed a patent for this. She has professional experience of over 14 years.
It is a protective bush designed to fit snugly around the manhole cover of a Executive Director. Associated with the company since Sep’20. He
Venkata
glass lined reactor, providing a barrier to prevent the maintenance hole cover holds a diploma in mechanical engineering from the State Board of
Mohana
Smart Seal from hitting the vessel. The protective bush is made of a durable, non- Technical Education and Training, Department of Technical Education,
contaminating material and is designed to be easily removable for cleaning or Rao Katragadda
Tamil Nadu. Had worked with The Jeypore Sugar Company Limited.
maintenance purposes. SGLT has filed patent for this. Executive Director. Associated with the company since 1st Oct’21. He
In the reactors, clamping the manhole is a major challenge and requires a Kandula has passed his part I and II in Technicians Engineering Examination from
Clampless
huge effort from the customer’s side. Instead, use bolting cleats - requires Ramakrishna The Institute of Mechanical Engineers & has professional experience of
Manhole
less torque and is easy to operate with long durability. over 14 years
The traditional ways of lining nozzles generally damages them due to spillage Sudhakara
Extended
of the corrosive chemicals on the mild steel surface. SGLT has developed glass Reddy Independent Director
Nozzles
lining on the outer periphery of the nozzle to resolve this. Siddareddy
Low Yasuyuki Ikeda Non-Executive Director – nominee of AGI Inc, Japan investors
Leaching,
Radhika
High Independent Director
For special applications where higher corrosive resistance is erquired Nannapaneni
Corrosive-
Resistance
Reactors
PTFE lined
equipment
To meet the increasing demand for high performance corrosion resistant
and
solutions
componen
ts

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Standard Glass Lining – BUY

Figure 33: Details of senior management Figure 35: Related party transactions details
Name Remarks FY22 FY23 FY24
Chief Financial Officer. Associated with the company since 4th Mar’22; he % of PAT
Anjaneyulu has worked with Aurobindo Pharma (Assistant General manager), M Remuneration of KMP 3.5% 3.8% 4.0%
Pathuri Anandam & Co (Audit Manager), S.R Batliboi & Associates (Senior
Rent expense 11.6% 9.9% 7.7%
manager) and is a Chartered Accountant.
Company Secretary and Compliance Officer. Associated with the company % of Revenue
Kallam Hima since Oct’21; graduate from Indira Gandhi National Open University Purchase of goods 1.7% 0.4% 1.3%
Priya and LLB from Osmania university. Had worked with Birthplace Healthcare Sale of goods 28.3% 8.8% 2.6%
Private Limited as Company Secretary. Source: Company, IIFL Research
Executive Vice President, Manufacturing. Associated with the company
Kudaravalli
since its incorporation and previously working with Nava Bharat Ferro
Punna Rao
Alloys Limited.
Palayil Nanda Chief Marketing Officer, South India. Associated with the company since
Kumar May’24 and previously with GMM Pfaudler Limited.
Somanchi General Manager, Projects. Associated with the company since May’24,
Datta and previously with Sai Life Sciences Limited, Dr. Reddy’s Laboratories
Phani Limited, Covalent Laboratories Private Limited and Hetero Infrastructure
Prabhakar Limited.
Assistant General Manager, Purchase. Associated with the company since
Radhakrishna Sep’12, holds a bachelor’s degree in science from PB Siddhartha College,
Bandi Vijaywada and MRes – Analytical Chemistry from Nottingham Trent
University.
Source: Company

Figure 34: Group companies have no material common pursuit with SGLT
Schematic
Higenic Flora CPK Engineers Private S2 Engineering
Engineering
Pvt Ltd Limited Industry Pvt Ltd
Industries
Rs mn FY23 FY24 FY22 FY23 FY24 FY23 FY24 FY23 FY24
Revenue 127 145 297 227 338 2,899 3,120 50 512
PAT 2 2 29 23 18 338 312 2 68
Net Asset
3 5 207 229 248 2 70
value
Source: Company, IIFL Research *Others not included above are Stanseals Pvt Ltd, Standard Group of
Companies Private Limited and Stanvalves and Controls Pvt Ltd, which have negligible revenue and
profit.

an u pa m.g u pta @ii fl c ap. c om 15

Company snapshot Standard Glass Lining – BUY

Background: Incorporated in 2012, Standard Glass has grown rapidly to become one of the top five specialised engineering equipment manufacturer for
pharmaceutical and chemical sectors in India. Starting operations in 2013, SGLT now has a wide product offering spanning 65 SKUs through organic and
inorganic route to cater to all major needs across for pharma and chemicals capex. This is backed by in-house capabilities at its facilities in Hyderabad.
SGLT counts AGI Inc Japan as a strategic investor with 10.5% stake which provides it technologically advanced products unique to the company for sale
in India and overseas. It has also tied up with IPP Global to expand the global presence and drive export revenues going ahead.

Management
Offers core equipment for pharma/chemicals
Name Designation FY24 end use industry mix
Nageswara Rao Kandula Managing Director
Chemic
Venkata Mohana Rao als,
Executive Director
Katragadda 12.5%
Anjaneyulu Pathuri Chief Financial Officer
Others,
5.7%
Pharma
, 81.8%

GMM Pfaudler, HLE Glascoat:

Assumptions PE Chart EV/Ebitda

Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii 12m fwd EV/EBITDA Avg +/- 1SD
12m fwd PE Avg +/- 1SD
Revenue growth 107.2 9.3 19.4 20.6 21.4
Ebitda margin 17.2 17.5 18.6 18.1 18.7 45.0 30.0
(x) (x)
WC cycle 110 256 193 193 193 42.0 27.0
Source: Company data, IIFL Research
39.0 24.0
36.0 21.0
33.0
18.0
30.0
15.0
27.0
24.0 12.0
Jan-25 Jan-25 Feb-25 Feb-25 Feb-25 Mar-25 Jan-25 Jan-25 Feb-25 Feb-25 Feb-25 Mar-25

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Standard Glass Lining – BUY

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
Revenues 4,976 5,437 6,492 7,829 9,506 Cash & cash equivalents 54 519 3,136 3,363 3,482
Ebitda 858 949 1,206 1,418 1,779 Inventories 1,434 2,248 2,684 3,237 3,931
Depreciation and amortisation (77) (93) (113) (195) (264) Receivables 913 1,548 1,848 2,229 2,706
Ebit 781 856 1,093 1,223 1,515 Other current assets 230 1,273 391 472 573
Non-operating income 25 60 110 161 150 Creditors 750 887 1,059 1,277 1,551
Financial expense (87) (118) (160) (55) (59) Other current liabilities 325 369 440 531 645
PBT 719 798 1,043 1,329 1,606 Net current assets 1,557 4,332 6,560 7,493 8,496
Exceptionals 0 0 0 0 0 Fixed assets 777 997 1,094 1,299 1,435
Reported PBT 719 798 1,043 1,329 1,606 Intangibles 6 10 87 87 87
Tax expense (184) (195) (263) (335) (405) Investments 0 0 0 0 0
PAT 534 603 781 994 1,201 Other long-term assets 63 60 60 60 60
Minorities, Associates etc. 0 0 0 0 0 Total net assets 2,404 5,398 7,800 8,939 10,078
Attributable PAT 534 603 781 994 1,201 Borrowings 820 1,293 415 559 497
Other long-term liabilities 27 31 31 31 31
Ratio analysis Shareholders equity 1,557 4,073 7,354 8,348 9,549
Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii Total liabilities 2,404 5,398 7,800 8,939 10,078
Per share data (Rs)
Pre-exceptional EPS 3.4 3.3 3.9 5.0 6.0 Cash flow summary (Rs m)
DPS 0.0 0.0 0.0 0.0 0.0 Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
BVPS 9.9 22.4 36.9 41.8 47.9 Ebit 781 856 1,093 1,223 1,515
Growth ratios (%) Tax paid (205) (188) (263) (335) (405)
Revenues 107.2 9.3 19.4 20.6 21.4 Depreciation and amortization 77 93 113 195 264
Ebitda 112.0 10.7 27.1 17.5 25.5 Net working capital change (670) (1,450) 388 (705) (885)
EPS 105.9 (2.0) 17.9 27.4 20.8 Other operating items 10 (21) 0 0 0
Profitability ratios (%) Operating cash flow before interest (7) (710) 1,332 377 490
Ebitda margin 17.2 17.5 18.6 18.1 18.7 Financial expense (87) (118) (160) (55) (59)
Ebit margin 15.7 15.7 16.8 15.6 15.9 Non-operating income 112 178 270 216 209
Tax rate 25.6 24.5 25.2 25.2 25.2 Operating cash flow after interest 18 (650) 1,442 538 640
Net profit margin 10.7 11.1 12.0 12.7 12.6 Capital expenditure (294) (336) (210) (400) (400)
Return ratios (%) Long-term investments 0 (1,249) 77 0 0
ROE 47.6 21.4 13.7 12.7 13.4 Others 4 381 (155) 0 0
ROIC ex goodwill 31.4 18.1 17.3 18.0 18.8 Free cash flow (273) (1,854) 1,154 138 240
Solvency ratios (x) Equity raising 334 1,932 2,500 0 0
Net debt-equity 0.5 0.2 (0.4) (0.3) (0.3) Borrowings (8) 387 (1,038) 89 (121)
Net debt to Ebitda 0.9 0.8 (2.3) (2.0) (1.7) Dividend 0 0 0 0 0
Interest coverage 9.0 7.3 6.8 22.4 25.6 Net chg in cash and equivalents 53 465 2,616 228 119
Source: Company data, IIFL Research Source: Company data, IIFL Research

an u pa m.g u pta @ii fl c ap. c om 17

Tata Motors – ADD
Mgmt meeting

12 March 2025

Macro environment outweighs execution

We met Tata Motors’ mgmt. yesterday. Tata Motors has done a good CMP Rs648 Price performance (%)
job stemming mkt-share loss in MHCV and scaling up CV 12-mth TP (Rs) 790 (22%) 1M 3M 1Y
profitability to multi-year high. Loss of mkt-share in LCV is a
Market cap (US$m) 27,317 Absolute (Rs) (6.9) (19.0) (28.6)
concern; mgmt. is planning corrective action. In PV, end-demand is
Absolute (US$) (6.7) (21.3) (32.3)
weak. Tata Motors is planning several product interventions (new Enterprise value(US$m) 34,782
launches & re-launch of existing models). JLR’s ‘House of brands’ Relative Perf. (3.1) (11.2) (28.5)
Bloomberg TTMT IN
strategy is working well for its star brands (RR, RR Sport and Cagr (%) 3 yrs 5 yrs
Defender). The launch pipeline in coming years will focus on EVs. Sector Auto EPS (Rs) NA 134.5
JLR will continue on its path towards ‘premium luxury’ positioning,
targeting consistent volume and ASP growth. In the near term, lack Shareholding pattern (%) Stock performance
of growth in India PV/CV segments and global premium car Promoter 42.6 Vol('000, LHS) Price (Rs., RHS)
markets imply that earnings risk is to the downside. Pledged (as % of promoter share) 1.8 80,000 1,500
CV – Good execution in MHCV, but LCV needs course-correction: CV FII 18.7
60,000
DII 16.8 1,000
industry is currently in a ‘no-growth’ zone. Yet, industry profitability is at a 40,000
multi-year high due to pricing discipline in the industry. Tata Motors’ mkt- 52Wk High/Low (Rs) 1162/619 500
20,000
share in trucks is holding up well in FY25, while in bus segment is Shares o/s (m) 3681
improving. LCV segment has been a struggle for Tata Motors, with Del Value 3mth avg (US$ m) 43.2 0 0

Nov-24
Nov-23

Sep-24
Jul-23

Jul-24
Sep-23
Mar-23

Jan-25
Mar-25
May-23

Jan-24
Mar-24
May-24
continuous mkt-share loss in the last 3-4 years. Mgmt. recognises the need Dividend yield FY26ii (%) 0.9
for course-correction and is planning corrective actions soon. Free float (%) 57.4
PV – Market-share has come off from peak; new launches hold key: Financial summary (Rs m)
PV industry is seeing stress in demand. Mgmt. sees this as a cyclical phase Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
after 3 years of strong growth. Tata Motors has lost mkt-share in PV in
Revenues (Rs m) 3,459,670 4,379,278 4,470,025 4,762,501 5,157,282
recent quarters due to i) existing models losing sheen, ii) new models such
Ebitda margins (%) 9.2 13.6 12.7 12.9 13.2
as Curvv not meeting expectations, iii) rise in competition and iv) capacity-
Pre-exceptional PAT (Rs m) 7,336 253,541 207,258 244,926 258,934
related challenges on vehicle servicing (being corrected). The company is
planning to i) re-position Curvv, ii) refresh existing models such as Altroz, Reported PAT (Rs m) 24,143 313,991 215,733 244,926 258,934
and iii) launch new models (Harrier EV, Sierra ICE/EV in 2025). Pre-exceptional EPS (Rs) 1.9 66.2 55.2 66.5 70.3
Growth (%) NM NM -16.6 20.6 5.7
JLR – ‘House of brands’ strategy working well: JLR is well on its way (6.5) (1.3) (9.2)
IIFL vs consensus (%)
to becoming a ‘premium luxury’ brand. Its star brands RR, RR Sport and
PER (x) NM 9.8 11.7 9.7 9.2
Defender account for 70% of volumes and are doing well. The right strategy
ROE (%) 1.8 45.3 24.4 22.4 19.6
for Evoque and Discovery brands is still being worked out. Ebitda margin
pressure in recent quarters is attributable to rise in VME (excl. RR, RRS and Net debt/equity (x) 1.9 0.7 0.3 0.1 0.0
Defender) and warranty costs (pre-2020 models). JLR’s launch pipeline is EV/Ebitda (x) 10.5 5.1 5.0 4.3 3.7
focused on EVs, with Range Rover EV in late-2025 and Jaguar EV in 2026. Price/book (x) 6.2 3.5 2.5 2.0 1.7
Mgmt. downplayed the risk of JLR being over-dependent on EVs (product OCF/Ebitda (x) 1.1 1.1 1.1 1.0 1.0
pipeline perspective) when global EV adoption is plateauing. Source: Company, IIFL Research. Priced as on 11 March 2025

Joseph George Harsh Shah Ankit Ruparel

joseph.george@iiflcap.com harsh.shah@iiflcap.com ankit.ruparel@iiflcap.com
91 22 4646 4667 91 22 4646 4656 91 22 4646 4696
Tata Motors – ADD

Key takeaways
5. Harrier EV is set to launch soon, while Sierra ICE/EV will be launched
CVs in the 2025 festive season.

1. CV industry has done well in terms of profitability with good pricing 6. By FY27/FY28, 20% of TaMo’s PV volumes are targeted to be EVs. The
discipline in the industry, despite lack of volume growth in recent company will need a 15% EV mix to meet Café norms. By FY30, EV
quarters. penetration in Tata Motors’ sales is expected to reach 30%.

2. There have been execution issues in the LCV business. Mgmt. 7. PV segment Ebitda margin is currently 300 basis points below mgmt.
recognises the need for course-correction and is planning corrective target; the company is focused on achieving double-digit Ebitda.
actions soon.
JLR
3. Bus segment is on a positive trajectory, with market-share gain for
Tata Motors in FY25. This business is likely to gain further momentum for 1. Mgmt. reiterated that JLR is on track to meet its FY25 guidance (Rev:
Tata Motors. GBP29bn and Ebit margin: 8.5%)

4. CV exports are struggling for growth, reflecting challenges in global 2. Global EV adoption continues to rise, but the curve is flattening. JLR is
markets. well-placed to comply with emission norms in the EU, UK and rest of the
World. Emission norm changes in the US are being watched out for.
PVs
3. Demand environment is good in the US. In the EU, situation is stable.
1. Stress in PV industry is attributable to the cyclical nature of the industry UK volumes are expected to bounce-back in 2025. In China, overall
after few years of strong growth, post Covid. market is weak, but JLR is doing much better. Inventory levels in China
are low and hence, not a cause for concern.
2. Tata Motors’ service network in PV hasn’t scaled up to the same extent
as its sales volume in recent years. As a result, ‘vehicle service’ is facing 4. VME expenses spiked due to higher incentives on models other than
a capacity issue. The company has identified this problem and is taking Range Rover, RR Sport and Defender. Run-down of Jaguar ICE models is
action to correct it in coming months. also elevating average VME for the company. Mgmt. expects VME to
stabilise around 3% vs 4.2% in 3QFY25.
3. Repositioning of Curvv brand will be undertaken very soon (coinciding
with upcoming IPL season). Tata Altroz will undergo a re-launch in the 5. JLR’s capex is expected to peak in FY26 (with major launches) and
near future. moderate from FY27.

4. Although there have been many launches by competition in the EV 6. JLR is on track to become net cash by end of FY25.
space, price points are higher compared to bulk of Tata Motors’ current
EV offerings. The only competitor model with a price overlap with Tata
Motors is MG Motors’ Windsor. Mgmt. believes that increase in
electrification in the PV industry due to launches by competitors will have
a positive rub-off on Tata Motors’ EV business as well.

j o s eph .g e o rg e @ii fl c ap. c om 2

Tata Motors – ADD

Figure 1: MHCV Industry volumes (wholesales) are flattish yoy Figure 3: LCV Industry volumes (wholesales) are declining yoy
MHCV Industry vol - LHS YoY growth (%) - RHS LCV Industry vol - LHS YoY growth (%) - RHS
60,000 40% 70,000 40%
50,000 30% 60,000 30%
50,000
40,000 20% 20%
40,000
30,000 10% 10%
30,000
20,000 0% 0%
20,000
10,000 -10% 10,000 -10%
0 -20% 0 -20%
Apr-23
May-23

Apr-24
May-24

Apr-23
May-23

Apr-24
May-24
Mar-23

Dec-23

Mar-24

Dec-24
Aug-24

Mar-23

Dec-23

Dec-24
Aug-23

Aug-23
Jun-24

Oct-24

Oct-23

Mar-24

Aug-24
Jun-23

Oct-23

Oct-24
Jan-23

Nov-23

Jan-24

Nov-24

Jan-25

Jan-23

Jun-23

Jun-24
Nov-23

Jan-24

Nov-24

Jan-25
Feb-23

Jul-23

Sep-23

Feb-24

Jul-24

Sep-24

Feb-25

Feb-23

Jul-23

Sep-23

Feb-24

Jul-24

Sep-24

Feb-25
Source: SIAM, IIFL Research Source: SIAM, IIFL Research

Figure 2: Tata Motors – MHCV Market-share trend Figure 4: Tata Motors – LCV Market-share trend
TTMT MHCV mkt share 2022 2023 2024 2025 TTMT LCV Goods mkt share 2022 2023 2024 2025
50% 45%

45% 40%
40%
35%
35%
30%
30%

25% 25%

20% 20%
Jan

Feb

Sep

Nov

Dec

Jan
Apr

Feb

Apr

Sep

Nov

Dec
Aug
Mar

May

Aug
Jul

Mar

May

Jul
Oct

Oct
Jun

Jun
Source: Vahan, IIFL Research Source: Vahan, IIFL Research

j o s eph .g e o rg e @ii fl c ap. c om 3

Tata Motors – ADD

Figure 5: PV Industry volumes (wholesales) are weak yoy Figure 7: EV sales in PV Industry
PV Industry wholesales - (LHS) PV EV Industry volumes - (LHS) YoY growth (%) - RHS
500,000 20% 14,000 200%
12,000
400,000 15% 150%
10,000
300,000 10% 8,000 100%

200,000 5% 6,000 50%

4,000
100,000 0% 0%
2,000
0 -5% 0 -50%
Apr-23

Apr-24

Apr-23

Apr-24
Mar-23

Dec-23

Dec-24
May-23

Aug-23

Mar-24

May-24

Aug-24

Mar-23

Dec-23
May-23

Aug-23

Mar-24

Dec-24
May-24

Aug-24
Jun-23

Oct-23

Jun-24

Oct-24

Jun-23

Oct-23

Jun-24

Oct-24
Jan-23

Nov-23

Jan-24

Nov-24

Jan-25

Jan-23

Nov-23

Jan-24

Nov-24

Jan-25
Feb-23

Jul-23

Sep-23

Feb-24

Jul-24

Sep-24

Feb-25

Feb-23

Jul-23

Sep-23

Feb-24

Jul-24

Sep-24

Feb-25
Source: SIAM, IIFL Research Source: Vahan, IIFL Research

Figure 6: Tata Motors – PV Market-share trend Figure 8: Tata Motors EV market share trend
TTMT PV mkt share - Vahan 2022 2023 2024 2025 TTMT PV EV mkt share 2022 2023 2024 2025
17% 100%

14% 80%

11% 60%

8% 40%

5% 20%
Nov
Jan

Feb

Sep

Dec
Apr

Aug
Mar

May

Oct
Jul
Jun

Jan

Feb

Sep

Nov

Dec
Apr

Aug
Mar

May

Oct
Jul
Jun
Source: Vahan, IIFL Research Source: Vahan, IIFL Research

j o s eph .g e o rg e @ii fl c ap. c om 4

Tata Motors – ADD

Figure 9: Volume trend of global premium carmakers Figure 11:Tata Motors – SOTP-based TP of Rs790
Rs Mn Rs per share
Audi BMW Mercedes* Porsche
30% Standalone Dec'26 Ebitda 132,406
Standalone EV at 11.0 x Dec'26 Ebitda 1,456,463 396
20%

10% JLR Dec'26 Ebitda (pre-R&D amortisation) 539,660

JLR Dec’26 Ebitda (adjusted for R&D amortisation) 516,980
0%
JLR EV at 2.0x Dec'26 Ebitda 1,033,960 281
-10%
Less: Net Automotive debt (FY26-end) 137,106 37
-20%
3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25
Equity value (Standalone + JLR) 714

Source: Company, IIFL Research; *Note- Wholesales Equity value of EV Co. 32

Tata Technologies + Tata Motors Finance 43

Figure 10: JLR wholesales (excl. China JV) are flattish yoy in FY25 YTD
JLR wholesales (ex-JV) - LHS YoY growth - RHS
125,000 75% SoTP-based value (rounded-off) 790
Source: IIFL Research
100,000 50%

75,000 25%

50,000 0%

25,000 -25%

0 -50%
3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25

Source: Company, IIFL Research

j o s eph .g e o rg e @ii fl c ap. c om 5

Tata Motors – ADD

Figure 12:Tata Motors – Summary of estimates

FY23 FY24 FY25ii FY26ii FY27ii
JLR (GBP mn)
Volumes (ex-JV) 321,362 401,303 396,988 410,890 430,483
Volume growth 9.2% 24.9% -1.1% 3.5% 4.8%
Revenues 22,809 28,995 29,085 31,006 34,109
Ebitda 2,636 4,620 4,145 4,436 4,990
Ebitda margin 11.6% 15.9% 14.3% 14.3% 14.6%
Ebit margin 2.4% 8.5% 8.4% 8.5% 8.1%
PAT (53) 1,917 1,623 1,822 1,929
Standalone (Rs mn)
Total volumes 954,654 969,354 947,064 999,693 1,042,509
Volume growth 30.9% 1.5% -2.3% 5.6% 4.3%
Revenues 1,140,553 1,259,891 1,210,966 1,295,908 1,355,591
Ebitda 78,978 112,491 114,265 129,996 133,209
Ebitda margin 6.9% 8.9% 9.4% 10.0% 9.8%
PAT 25,544 67,204 92,237 67,577 70,029
Consolidated (Rs mn)
Revenue 3,459,670 4,379,278 4,470,025 4,762,501 5,157,282
Ebitda 318,296 596,101 569,067 616,152 679,204
Ebitda margin 9.2% 13.6% 12.7% 12.9% 13.2%
PAT 7,336 253,541 207,258 244,926 258,934
EPS (Rs) 1.9 66.2 55.2 66.5 70.3
Net automotive debt 437,000 160,000 19,923 (137,106) (311,418)
Source: IIFL Research

j o s eph .g e o rg e @ii fl c ap. c om 6

Company snapshot Tata Motors – ADD

Background: Tata Motors was established in 1945 as Tata Engineering and Locomotive Co Ltd, to manufacture locomotives and other engineering
products. It is the leader in the Indian commercial vehicles space. It is also present in the passenger vehicles segment, although losing market share. Tata
Motors has operations in the UK, South Korea, Thailand, Spain, South Africa and Indonesia. The biggest of the subsidiaries – Jaguar Land Rover (JLR), a
business comprising two iconic British brands – was acquired in 2008. Through its subsidiaries, the company is engaged in engineering & automotive
solutions, automotive vehicle components manufacturing & supply chain activities, vehicle financing, and machine tools & factory automation solutions.

Management JLR volume trend

Revenue break up (FY24)
Name Designation ('000) JLR volumes YoY growth
Non-Executive Director and M&HCV
N. Chandrasekaran 10% 700 30%

Thousands
Chairman LCV 600 20%
Adrian Mardell CEO – Jaguar Land Rover 2% 500 10%
P B Balaji Group CFO 400
Cars and 0%
UVs 300
12% 200 -10%
JLR
69% 100 -20%
Exports & 0 -30%

FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
Others
7%

Volume Assumptions PE Chart EV/Ebitda

Y/e 31 Mar FY23A FY24A FY25ii FY26ii FY27ii
Domestic MHCV 170,460 174,438 180,069 186,500 180,905 12m fwd PE Avg +/- 1SD 12m fwd EV/EBITDA Avg +/- 1SD
Domestic LCV 222,857 203,622 191,350 199,214 200,345 10.0
Domestic Cars 538,668 570,969 556,374 592,764 637,862 (x) 9.0 (x)
90.0
Exports 22,669 20,325 19,271 21,215 23,397 8.0
JLR volumes 372,217 401,303 396,988 410,890 430,483 75.0
7.0
Source: Company, IIFL Research 60.0
6.0
45.0 5.0
30.0 4.0
15.0 3.0
0.0 2.0
Apr-17 Nov-18 Jun-20 Dec-21 Aug-23 Mar-25 Apr-17 Nov-18 Jun-20 Dec-21 Aug-23 Mar-25

j o s eph .g e o rg e @ii fl c ap. c om 7

Tata Motors – ADD

Financial summary
Income statement summary (Rs m) Balance sheet summary (Rs m)
Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
Revenues 3,459,670 4,379,278 4,470,025 4,762,501 5,157,282 Cash & cash equivalents 558,539 600,599 557,302 556,331 583,524
Ebitda 318,296 596,101 569,067 616,152 679,204 Inventories 407,554 477,883 438,286 463,948 512,209
Depreciation and amortisation (248,604) (272,701) (234,939) (248,912) (302,079) Receivables 157,380 169,518 158,552 168,956 183,526
Ebit 69,692 323,400 334,128 367,241 377,125 Other current assets 638,266 663,893 633,545 616,949 599,058
Non-operating income 46,332 59,499 59,585 48,305 49,141 Creditors 792,518 939,785 1,108,947 1,308,557 1,544,097
Financial expense (102,255) (99,858) (78,488) (70,511) (62,943) Other current liabilities 687,097 751,857 578,531 459,376 313,236
PBT 13,769 283,041 315,224 345,035 363,323 Net current assets 282,123 220,251 100,207 38,251 20,984
Exceptionals 16,807 60,450 8,476 0 0 Fixed assets 889,563 975,910 1,170,704 1,298,512 1,406,233
Reported PBT 30,576 343,491 323,700 345,035 363,323 Intangibles 573,980 593,928 607,738 607,738 607,738
Tax expense (7,041) (32,421) (105,212) (98,643) (103,666) Investments 83,686 93,917 95,964 99,298 103,375
PAT 23,535 311,070 218,487 246,392 259,657 Other long-term assets 0 0 0 0 0
Minorities, Associates etc. 608 2,921 (2,754) (1,466) (723) Total net assets 1,829,352 1,884,008 1,974,612 2,043,799 2,138,329
Attributable PAT 24,143 313,991 215,733 244,926 258,934 Borrowings 1,341,134 1,072,625 889,251 731,251 584,132
Other long-term liabilities 86,847 93,193 105,015 109,815 114,615
Ratio analysis Shareholders equity 401,371 718,190 980,347 1,202,734 1,439,583
Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii Total liabilities 1,829,352 1,884,008 1,974,612 2,043,799 2,138,329
Per share data (Rs)
Pre-exceptional EPS 1.9 66.2 55.2 66.5 70.3 Cash flow summary (Rs m)
DPS 2.0 6.0 6.0 6.0 6.0 Y/e 31 Mar, Consolidated FY23A FY24A FY25ii FY26ii FY27ii
BVPS 104.8 187.4 261.0 326.8 391.1 Ebit 69,692 323,400 334,128 367,241 377,125
Growth ratios (%) Tax paid (31,790) (45,163) (98,191) (98,643) (103,666)
Revenues 24.2 26.6 2.1 6.5 8.3 Depreciation and amortization 248,604 272,701 234,939 248,912 302,079
Ebitda 28.3 87.3 (4.5) 8.3 10.2 Net working capital change (31,271) 73,252 76,747 60,985 44,461
EPS (106.8) 3353.0 (16.6) 20.6 5.7 Other operating items 98,646 54,964 62,458 48,305 49,141
Profitability ratios (%) Operating cash flow before interest 353,880 679,154 610,081 626,799 669,140
Ebitda margin 9.2 13.6 12.7 12.9 13.2 Financial expense (93,360) (93,323) (78,488) (70,511) (62,943)
Ebit margin 2.0 7.4 7.5 7.7 7.3 Non-operating income 10,416 25,886 0 0 0
Tax rate 23.0 9.4 32.5 28.6 28.5 Operating cash flow after interest 270,936 611,717 531,593 556,289 606,197
Net profit margin 0.7 7.1 4.9 5.2 5.0 Capital expenditure (186,469) (311,825) (368,542) (376,720) (409,800)
Return ratios (%) Long-term investments (1,442) 6,262 0 0 0
ROE 1.8 45.3 24.4 22.4 19.6 Others 10,799 12,644 0 0 0
ROIC ex goodwill 4.5 24.8 18.1 19.5 19.1 Free cash flow 93,824 318,797 163,050 179,569 196,397
Solvency ratios (x) Equity raising 33,742 38,942 0 0 0
Net debt-equity 1.9 0.7 0.3 0.1 0.0 Borrowings (201,402) (305,088) (183,374) (158,000) (147,119)
Net debt to Ebitda 2.5 0.8 0.6 0.3 0.0 Dividend (1,409) (10,591) (22,974) (22,539) (22,085)
Interest coverage 0.7 3.2 4.3 5.2 6.0 Net chg in cash and equivalents (75,245) 42,061 (43,298) (971) 27,193
Source: Company data, IIFL Research Source: Company data, IIFL Research

j o s eph .g e o rg e @ii fl c ap. c om 8

Tata Motors – ADD

Date Rating Close price Target price Upside Date Rating Close price Target Upside
Tata Motors: 3 year price and rating history (Rs) price (Rs)
(Rs) (Rs) (%) (%)
(Rs) Price TP/Reco changed date 30 Jan 2025 ADD 753 865 14.9 10 Nov 2022 BUY 433 520 20.1
11 Nov 2024 ADD 805 975 21.1 28 Jul 2022 BUY 444 585 31.8
1,400 02 Sep 2024 ADD 1111 1125 1.3 05 Jul 2022 BUY 408 550 34.8
1,200
1,000 02 Aug 2024 ADD 1144 1140 -0.3 16 Jun 2022 BUY 414 515 24.4
800 13 May 2024 ADD 1047 1110 6.0 13 May 2022 BUY 372 510 37.1
600 05 Feb 2024 BUY 879 980 11.5
400 03 Nov 2023 BUY 636 765 20.3
200
0 26 Jul 2023 BUY 639 750 17.4
15 May 2023 BUY 516 595 15.3

Jun-24

Mar-25
Mar-22

Dec-22
Mar-23

Dec-23
Mar-24

Dec-24
Jun-22

Jun-23
Sep-22

Sep-23

Sep-24
11 Apr 2023 BUY 461 540 17.1
27 Jan 2023 BUY 419 545 30.1
20 Dec 2022 BUY 418 530 26.8

j o s eph .g e o rg e @ii fl c ap. c om 12

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Registration Details: Stock Broker SEBI Regn: INZ000164132(BSE/NSE/MCX/NCDEX), CDSL & NSDL SEBI Regn.: IN-DP-185-2016, PMS SEBI Regn. No. INP000002213, IA SEBI Regn. No.
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Key to our recommendation structure

BUY - Stock expected to give a return 10%+ more than average return on a debt instrument over a 1-year horizon.
SELL - Stock expected to give a return 10%+ below the average return on a debt instrument over a 1-year horizon.
Add - Stock expected to give a return 0-10% over the average return on a debt instrument over a 1-year horizon.
Reduce - Stock expected to give a return 0-10% below the average return on a debt instrument over a 1-year horizon.

Distribution of Ratings: Out of 295 stocks rated in the IIFL coverage universe, 148 have BUY ratings, 5 have SELL ratings, 102 have ADD ratings, 2 have NR ratings and 37 have REDUCE ratings

Price Target: Unless otherwise stated in the text of this report, target prices in this report are based on either a discounted cash flow valuation or comparison of valuation ratios with companies seen by the analyst as
comparable or a combination of the two methods. The result of this fundamental valuation is adjusted to reflect the analyst’s views on the likely course of investor sentiment. Whichever valuation method is used there
is a significant risk that the target price will not be achieved within the expected timeframe. Risk factors include unforeseen changes in competitive pressures or in the level of demand for the company’s products. Such
demand variations may result from changes in technology, in the overall level of economic activity or, in some cases, in fashion. Valuations may also be affected by changes in taxation, in exchange rates and, in certain
industries, in regulations. Investment in overseas markets and instruments such as ADRs can result in increased risk from factors such as exchange rates, exchange controls, taxation, and political and social conditions.
This discussion of valuation methods and risk factors is not comprehensive – further information is available upon request.

i. Investments in securities market are subject to market risks. Read all the related documents carefully before investing.
ii. Mutual Funds Investments are subject to market risk. Please read the offer and scheme related documents carefully before investing.
iii. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary
or provide any assurance of returns to investors
Strategy & Economy Banking FMCG, Consumer Discretionary Pharmaceuticals, Healthcare Real Estate, Building Materials,
G.V. Giri (91 22 4646 4676) Rikin Shah (91 22 4646 4668) Percy Panthaki (91 22 4646 4662) Rahul Jeewani (91 22 4646 4673) Politics
Karan Kadmawala (91 22 4646 4685) Viral Shah (91 22 4646 4781) Sameer Gupta (91 22 4646 4672) Naman Bagrecha (91 22 4646 4718) Mohit Agrawal (91 22 4646 4675)
Soham Dalal (91 22 4646 4659) Heet Khimawat (91 22 4646 4652) Siddhesh Deshmukh (91 22 4646 4657) Vivek Pandey (91 22 4646 4651) Saatvik Shetty (91 22 4646 4653)
Ryan Daniel (91 22 4646 4655) Harsh V Shah (91 22 4646 4788) Jay Kant Beria (91 22 4646 4762)
Automobiles, Airlines Shalin Kapadia (91 22 4646 4760) Rakshit Desai (91 22 4646 4743) NBFCs Vinay Agrawal (91 22 4646 4744)
Joseph George (91 22 4646 4667) Viral Shah (91 22 4646 4781)
Harsh Shah (91 22 4646 4656) Broking Infrastructure, Metal, Mining Rikin Shah (91 22 4646 4668) Rating companies, Telecom, Media,
Ankit Ruparel (91 22 4646 4696) Viral Shah (91 22 4646 4781) Anupam Gupta (91 22 4646 4641) Shalin Kapadia (91 22 4646 4760) Textiles,
Agriculture, Chemicals, Midcaps Business Services Mudit Bhandari (91 22 4646 4715) Heet Khimawat (91 22 4646 4652) Balaji Subramanian (91 22 4646 4644)
Ranjit Cirumalla (91 22 4646 4654) Siddharth Zabak (91 22 4646 4687) Ryan Daniel (91 22 4646 4655) Siddharth Zabak (91 22 4646 4687)
Viral M Shah (91 22 4646 4688) Balaji Subramanian (91 22 4646 4644) IT Services, Internet, Insurance Aryan Shah (91 22 4646 4648)
Aakash Maji (91 22 4646 4642) Rishi Jhunjhunwala (91 22 4646 4686) Utilities, Power
Disha Arora (91 22 4646 4774) Cement, Exchanges, AMCs Ankur Pant (91 22 4646 4645) Logistics Apoorva Bahadur (91 22 4646 4674)
Devesh Agarwal (91 22 4646 4647) Vishesh Jain (91 22 4646 4650) Yash Nandwani (91 22 4646 4670) Siddharth (91 22 4646 4791)
Apparel Retail, Footwear Kenil Doshi (91 22 4646 4704)
Sameer Gupta (91 22 4646 4672) Capital Goods, Electricals, Oil & Gas
Percy Panthaki (91 22 4646 4662) Electronics Manufacturing (EMS) Mid-caps Balaji Subramanian (91 22 4646 4644)
Siddhesh Deshmukh (91 22 4646 4657) Renu Baid (91 22 4646 4651) Vishal Mehta (91 22 4646 4649) Yash Nandwani (91 22 4646 4670)
Harsh V Shah (91 22 4646 4788) Hardik Rawat (91 22 4646 4752)
Rakshit Desai (91 22 4646 4743) Akshit Gangwal (91 22 4646 4661)

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India | March 12, 2025

Top Research Stories Market Front Page

Winners & Losers

Feb – CPI (AL/RL)

Feb CPI (IW)

Black: Quarterly results, Blue: Economic data, Red: India Holiday

Jan-Mar 25 Apr-Jun 25 Jul-Sep 25

Integrated CRDMO model primed for growth Company update

20% 39% 34% 40%

Source: Company, IIFL Research

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 2

As of Sep-24, Sai has a portfolio of 50 “late phase” and commercial

Source: Company, IIFL Research

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 3

rahul .jeew ani @ii fl cap .c om 4

Unit III Bollaram Facility Unit IV Bidar Facility Overall

Source: Company, IIFL Research

Source: Company, IIFL Research

Source: Company, IIFL Research

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 5

rahul .jeew ani @ii fl cap .c om 6

rahul .jeew ani @ii fl cap .c om 7

India CMC Unit III Bollaram Facility

rahul .jeew ani @ii fl cap .c om 8

rahul .jeew ani @ii fl cap .c om 9

rahul .jeew ani @ii fl cap .c om 10

Figure 22: Excerpts from Schrödinger’s Sep-2024 10-Q filing 5

rahul .jeew ani @ii fl cap .c om 11

rahul .jeew ani @ii fl cap .c om 12

rahul .jeew ani @ii fl cap .c om 13

Source: IIFL Estimates

rahul .jeew ani @ii fl cap .c om 14

Figure 33: Sai’s Product-wise Export data

rahul .jeew ani @ii fl cap .c om 15

rahul .jeew ani @ii fl cap .c om 16

rahul .jeew ani @ii fl cap .c om 17

Outsourcing penetration in Overall R&D Spend, 2018-2028F

Source: Company, IIFL Research

Cost Comparison with US manufacturing due to Outsourcing by

USA EU-5 Rest of EU APAC India

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 18

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 19

Source: Company, IIFL Research Source: Company, IIFL Research

Source: Company, IIFL Research Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 20

robust pipeline and industry tailwinds CDMO Revenue (USD m) % growth

rahul .jeew ani @ii fl cap .c om 21

While Sai’s reported Ebitda margins have already improved to 22% in

rahul .jeew ani @ii fl cap .c om 22

rahul .jeew ani @ii fl cap .c om 23

(3,000) -205% -500%

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 24

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 25

Management: Sai Life Sciences

Sauri Gudlavalleti Sivaramakrishnan Muniandi Chopperla Srikrishna

Dean David Runa Karan

Source: Company, IIFL Research

rahul .jeew ani @ii fl cap .c om 26

rahul .jeew ani @ii fl cap .c om 27

rahul .jeew ani @ii fl cap .c om 28

PILLS Bill: Despite the production incentive of 30-35%, as well as

Molecules going off-patent: Almost all of Sai’s manufacturing

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rahul .jeew ani @ii fl cap .c om 30

rahul .jeew ani @ii fl cap .c om 31

Assumptions PE Chart EV/Ebitda

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rahul .jeew ani @ii fl cap .c om 33