From Rs 18 to Rs 300: Ventura initiates coverage on this multibagger, see up to 52% upside

Domestic brokerage firm Ventura Securities has initiated coverage of Wanbury Ltd with a 'buy' recommendation, setting a price target of Rs 458  over the next 24 months. This represents a potential upside of 52% from the current market price of Rs 300.8, rising 2 per cent for the day and commanding a total market capitalization of 986 crore.

Wanbury's revenue is anticipated to grow at a compound annual growth rate (CAGR) of 20% between FY25 and FY28, reaching Rs 1,046 crore. EBITDA and net profit are expected to grow at CAGRs of 33% and 51%, respectively, reaching Rs 177 crore and Rs 104 crore by FY28.

EBITDA margin is projected to expand by 310 basis points to 15.5%, while net margin is expected to improve by approximately 290 basis points to 10%. The company's net worth is forecasted to rise from Rs 28 crore in FY24 to Rs 300 crore by FY28E.

Shares of Wanbury have zoomed nearly 1,565 per cent from its covid-19 low at Rs 18 apiece. Wanbury operates in the pharmaceutical sector, focusing on API and branded generics. While its APIs are primarily catering to exports, formulations are mainly for domestic consumption.

Wanbury's core strength lies in its Active Pharmaceutical Ingredients (API) segment, holding a global market share of 10% in Metformin and 30% in Sertraline. API revenues are projected to grow at a 16% CAGR to Rs 819 crore by FY28.

The domestic branded formulations business is expanding rapidly, focusing on high-margin chronic therapies. Formulations revenue is projected to grow at a 47% CAGR to Rs 227 crore by FY28, driven by new product launches and increased customer reach.

The company has successfully executed a turnaround from past setbacks related to its Spanish formulations venture, marked by a return to profitability and a positive net worth in FY24. Ventura highlights operational efficiencies and debt refinancing as key factors in Wanbury's robust growth outlook.

Despite the positive outlook, Ventura Securities identifies risks associated with missing formulations growth targets and high dependence on Metformin and Sertraline APIs, which could affect FY28 margins.

The company has earmarked Rs 165 crore for a brownfield expansion of its Tanuku plant, aimed at further supporting its growth trajectory in the coming years. This expansion, projected for FY26 to FY28, aligns with Wanbury's strategy to maintain an asset-light production model.