Jefferies assigned a new base target price of Rs 1,300 per share for Sai Life Sciences, implying an upside potential of more than 28% from the stock’s previous closing price of Rs 1,014 apiece on NSE. It sees the stock rising to Rs 1,500 apiece (+48%) in its upside scenario, but falling to Rs 800 apiece (-21%) in its downside scenario.
“Some of our top reasons are integrated ‘follow-the-molecule’ model, strong growth outlook, healthy pipeline projects, presence in oligos, headroom for growth, strong win rates, global presence, a clean balance sheet, no PE supply overhang, and valuations in line with peers despite robust growth,” Jefferies said, while increasing Sai Life Sciences’ FY28 sales and EPS estimates by 3% and 5% respectively.
The international brokerage cited the company’s ‘integrated module’ as the first reason investors should consider adding the stock to their portfolios. “Sai Life follows a proven model of ‘follow the molecule’ and starts pitching to client from the discovery stage and helps clients till commercial and lifecycle management. CDMO: CRO mix is well balanced at 65:35, providing enough early entry opportunities without slowing overall growth,” the firm said.
‘Sweet spot in size and shape’ was listed as the second reason. The company’s FY25 sales stood at just $200 million, which is relatively smaller when compared to its addressable market. Jefferies noted that the company is a pure-play contract research, development and manufacturing organisation (CRDMO) with no unrelated business divisions.
The international brokerage added that the company saw robust growth, delivering 23% sales CAGR and 57% EBITDA CAGR over the past three years. It forecast FY26-28E sales and EBITDA CAGR of 17% and 20%, respectively.
“Sai Life has continuously added new projects due to healthy win rate, in FY26 added new 7 molecules, of which 3 are commercial and 4 are in phase-3. Among the 3 commercial molecules, Sai believes it is the primary supplier for two of them, and they can be meaningful sales contributors in coming years. Overall we believe, key pipeline projects have CY28 end market sales of USD13bn+,” Jefferies said, explaining its fourth reason.Sai Life’s contract for key “building blocks” of a blockbuster commercial oligo molecule, no PE supply overhang, and a good mix of overseas presence and domestic facilities, were among few other factors.
Additionally, Sai is currently net debt neutral and Jefferies thinks leverage will remain low (below <0.5x) or a net cash company for next several years despite being in capex mode as capex will be funded through internal accruals.
Finally, the international brokerage listed out the company’s in-line valuations and room for more upgrades as the remaining reasons. Sai Life shares listed back in December 2024 at a premium of 18% over the issue price, and has delivered strong returns since its IPO. “Since our Sai Life initiation in Mar-25, we have upgraded our FY26e Revenue/PAT by 17%/30% and FY27e by 19%/25%. We believe the upgrade cycle is still not over yet as product pipeline continues to build up,” Jefferies said.
Sai Life Sciences shares made a decent debut on stock markets in December 2024, listing with a premium of a little more than 18% over its IPO price at Rs 650 apiece. The stock has so far gained 56% from its listing price and 85% from its IPO price.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)