Indegene shares rise 5% as Motilal Oswal upgrades stock; check target price

Indegene Ltd shares rose 5% in Friday's trade after Motilal Oswal Financial Services (MOFSL) upgraded the stock's rating to 'Buy' from 'Neutral' earlier, citing strong growth prospects from life sciences and pharma outsourcing, its consulting-led business model and increasing adoption of artificial intelligence (AI). The brokerage also expects operating leverage to support a recovery in margins.

MOFSL said global life sciences and pharma companies are increasingly outsourcing operations to reduce costs, accelerate go-to-market timelines, access specialised talent and manage fluctuating content requirements around drug launches. It said external agencies such as Indegene can scale teams based on demand, while helping streamline medical, legal and regulatory reviews.

Indegene shares rose 4.57% on Friday, hitting a high of Rs 621.90, compared with the previous close of Rs 593.45 apiece on BSE.

MOFSL set a target price of Rs 708 on Indegene, valuing the stock at 25 times estimated FY28 earnings per share. The target represented an upside of around 19% from the brokerage's reference price of Rs 595.

The brokerage expects Indegene's revenue, EBIT and PAT to grow at CAGRs of around 19%, 29% and 27%, respectively, in INR terms over FY26-28. It expects Ebitda margins to recover to 19-20% by the fourth quarter of FY27, supported by operating leverage.

Indegene's revenue rose 39.7% year-on-year to Rs 1,063.1 crore in Q1 FY27, with enterprise commercial solutions accounting for the largest share. Revenue from the segment grew 75.5% year-on-year to Rs 750.5 crore, while enterprise medical solutions revenue increased 24.7% to Rs 273.2 crore.

The brokerage also highlighted improving client diversification. The contribution of the top client declined to 9% in Q1 FY27 from 14.3% in Q1 FY25, while the top five clients' share fell to 30.4% from 40.7%. The number of clients generating more than $1 million in annual revenue stood at 54, including three clients generating more than $25 million.

For FY27, MOFSL estimates revenue of Rs 4,420 crore, Ebitda of Rs 796 crore and reported PAT of Rs 542 crore. For FY28, it expects revenue to rise to Rs 4,958 crore, Ebitda to Rs 962 crore and PAT to Rs 684 crore.