At a Glance
Cohance Lifesciences isn’t your typical pharma stock. It’s a CDMO (Contract Development and Manufacturing Organisation) darling with 45%+ EBITDA margins — but revenue growth is stalling and net profit has started coughing. At ₹37,600 Cr market cap and a P/E of 142, you’d think they discovered a COVID cure. They didn’t.
🧪 1. What Does Cohance Do?
- 📍Headquartered in Hyderabad
- 💼 Services for global pharma clients in:
- NCE (New Chemical Entity) development
- Intermediates & APIs
- Contract manufacturing (late-stage + commercial scale)
They’re positioned as a “high-end innovator enabler”, which sounds cooler than “B2B chemical factory”.
✅ Top 5 high-end intermediate suppliers to global innovators from India
🧬 Think of them as the backstage crew of global pharma — not making drugs, but building them.
📈 2. FY25 Performance: Strong Margins, Slowing Growth
| ₹ in Cr | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue | 1,010 | 1,320 | 1,340 | 1,051 | 1,198 |
| EBITDA | 443 | 582 | 574 | 406 | 375 |
| PAT | 362 | 454 | 411 | 300 | 265 |
| ROCE | 41% | 32% | 19% | 17% | 17% |
| OPM % | 44% | 44% | 43% | 39% | 31% |
| EPS ₹ | 14.2 | 17.8 | 16.2 | 11.8 | 10.5 |
📉 Revenue shrunk in FY24 and barely recovered in FY25
🧪 OPM dropped 12 percentage points in 3 years
📉 3. Q4FY25 Breakdown: What’s the Panic?
| Quarter | Revenue | OPM | Net Profit | EPS |
|---|---|---|---|---|
| Dec 23 | ₹307 Cr | 38% | ₹83 Cr | ₹3.26 |
| Mar 24 | ₹402 Cr | 18% | ₹39 Cr | ₹1.65 |
Yup. Margins halved.
Net profit crashed 53%.
EPS is literally down the drain.
No wonder investors are asking — “Where’s the pipeline?”
🚨 4. Promoter Moves & Clean-Up
🧹 In May 2025, promoter stake shot up to 66.4%
➕ Sale of non-core CR Bio unit for ₹16 Cr — trimming deadwood
📉 Public shareholding reduced to 15.2% — tightly held
But with FIIs cutting from 11% to 7.4% in May 2025, something’s off.
🧠 5. Valuation vs Peers
| Company | Mcap (₹ Cr) | P/E | ROCE | Remarks |
|---|---|---|---|---|
| Cohance Life | ₹37,600 | 142x 🤯 | 16.8% | CDMO-focused |
| Divi’s Labs | ₹1.75 L Cr | 80x | 20.4% | Legacy API/CDMO |
| Syngene | ₹28,000 | 59x | 10.1% | Biotech research |
| Suven Pharma (old entity) | ~₹20,000 | ~35x | 18% | Pre-deal era |
| Laurus Labs | ₹11,000 | 25x | 12% | Broad-based CDMO/API |
⚠️ Cohance is the most expensive CDMO in India by P/E
🧠 But its sales CAGR is <8%, and PAT is de-growing
🧮 6. Fair Value Estimate (EduMath)
Assume FY26 EPS = ₹12 (moderate rebound)
| P/E | FV (₹) |
|---|---|
| 40x | ₹480 |
| 50x | ₹600 |
| 60x | ₹720 |
🎯 Fair Value Range: ₹480 – ₹720
(Current Price: ₹983 = running on hype fumes)
🧨 7. Risks to Watch
- 📉 Revenue decline despite booming sector
- 🧪 No big CDMO breakthrough or capacity ramp announced
- 🧾 Debtor days shot up to 87 — billing problems?
- 💸 Zero dividend despite repeat profits
- 🔍 P/E is sky-high for a company with no FY25 growth
📦 8. EduTake: Cool Story, Bro?
Cohance Lifesciences is:
- Niche 🧪
- High-margin 🧠
- Global-facing 🌍
- Promoter-strong 💪
But the stock is:
- Frothy ☁️
- Overvalued 💸
- Underwhelming 📉
The CDMO narrative is spicy, but financials are bland. If FY26 doesn’t show a blockbuster growth molecule — this ₹37,000 Cr valuation might need a heavy dose of paracetamol.
✍️ Written by Prashant | 📅 June 22, 2025
Tags: Cohance Lifesciences, CDMO India, pharma stocks, contract manufacturing, Suven spin-off, FY25 results, overpriced stocks, Divi’s Labs peer, valuation bubble, healthcare investing
