Laurus Labs, Piramal, Divis, Sai Life, Cohance: Jefferies tests interest in CRDMO stocks

Jefferies recently held 50 investor meetings after publishing its thematic note on the Indian Contract Research, Development and Manufacturing Organisation (CRDMO) sector. The consensus among participants is positive, with most investors expecting strong growth over the next three to five years.

Investors, Jefferies said, are focused on company capabilities and the ability to win major contracts. Differentiated capability and a solid track record are viewed as critical for investment decisions. However, concerns remain about high valuations, volatile earnings, and the opaque nature of B2B business models. Many also highlighted the importance of capital expenditure and expansion plans as signals of management's confidence in future growth.

Some investors questioned the actual impact of the China+1 strategy and whether tariffs might complicate geographic diversification. There was minor pushback on the verifiability of the China+1 shift, with some expressing skepticism about how much it has benefited Indian CRDMOs. Concerns were also raised about whether global trade policies could pose challenges for companies seeking to diversify their client base beyond China and the US.

Divi’s Laboratories
Divi's Laboratories stands out as the sector’s most preferred name, valued for its strong track record and broad domestic ownership. While investors appreciate its mid- to long-term growth visibility, there is near-term caution regarding Entresto sales and whether growth expectations are already reflected in the share price. Some also wonder if consensus estimates are too optimistic, given the company’s premium valuation.

Cohance Lifesciences
Cohance Lifesciences has garnered significant interest following a recent price correction. Investors acknowledge its strong pipeline and growth prospects in ADC payload manufacturing but remain cautious about short-term outlook, patent expiries, and the feasibility of reaching its $1 billion sales target by FY31. There is also uncertainty regarding the performance of key small molecule products and the potential impact of future acquisitions.

Sai Life Sciences
Sai Life Sciences has seen improved investor confidence due to recent results and better project visibility. Still, many feel that most of the easy returns are behind, and there is uncertainty about the sustainability of strong performance. Several investors questioned whether the latest quarterly results were driven by one-off sales and are closely watching the pipeline of upcoming projects, as well as how Sai differentiates itself from peers.

Piramal Pharma
Piramal Pharma discussions centered on the outlook for its key product Nurtec, which is currently undergoing de-stocking. Investors are unsure about the timing of a rebound and whether sales targets for FY27 are achievable. There are also concerns about low return ratios and the company’s ability to meet financial guidance. Uncertainty remains regarding which markets are served by Piramal versus other Indian CRDMOs that also manufacture Nurtec.

Syngene
Syngene International attracted attention due to its valuation discount relative to peers. Investors questioned its operational underperformance, capacity utilization ramp-up, and ability to secure new RFQs. There is interest in understanding when new capacity will be fully utilized and how Syngene plans to improve its track record in winning large contracts.

Laurus Labs
Laurus Labs is seen as having robust near-term prospects in CRDMO, but the absence of guidance creates uncertainty. There are also worries about risks to its ARV business and high valuation. Investors are wary of emerging therapies in the LMIC ARV segment, which could impact Laurus’s market position.