Company Overview
Saurashtra Pharma Limited is a research-driven pharmaceutical company engaged in the manufacturing and marketing of pharmaceutical formulations. The company specializes in developing high-quality generic drugs across various therapeutic segments including cardiovascular, anti-diabetic, and respiratory medications.
Founded in 2010, the company has established a strong presence in the domestic market with a focus on affordable healthcare solutions. Their state-of-the-art manufacturing facility in Gujarat is WHO-GMP certified and maintains the highest quality standards.
The company serves a diverse customer base including institutional buyers, retail pharmacies, and export markets. With a commitment to quality and innovation, Saurashtra Pharma has built a reputation for reliable and effective pharmaceutical products.
Business Model
The company operates through multiple revenue streams:
Manufacturing: In-house production of pharmaceutical formulations with focus on generic drugs and OTC products. The company operates a state-of-the-art manufacturing facility with capacity to produce 50 million tablets and 2 million vials annually.
Contract Manufacturing: Providing CDMO (Contract Development and Manufacturing Organization) services to other pharmaceutical companies, leveraging their WHO-GMP certified facility.
Marketing & Distribution: Direct sales through a network of 200+ distributors across India, covering both urban and rural markets with strong presence in Gujarat, Maharashtra, and Rajasthan.
Export Operations: Expanding presence in emerging markets including Africa and Southeast Asia with regulatory approvals in 8 countries.
Financial Performance
| Particulars | FY22 | FY23 | FY24 | Growth % |
|---|---|---|---|---|
| Revenue | ₹18.45 Cr | ₹21.38 Cr | ₹24.55 Cr | +14.8% |
| PAT | ₹1.89 Cr | ₹2.34 Cr | ₹2.89 Cr | +23.5% |
| PAT Margin | 10.25% | 10.95% | 11.78% | +83 bps |
| EBITDA | ₹3.12 Cr | ₹3.85 Cr | ₹4.67 Cr | +21.3% |
| ROE | 18.5% | 19.2% | 21.4% | +220 bps |
Key Highlights
Strong Financial Performance
Consistent revenue growth of 14.8% CAGR over the last 3 years with improving margins and strong ROE of 21.4%
Quality Certifications
WHO-GMP certified manufacturing facility ensuring international quality standards and regulatory compliance
Diverse Product Portfolio
150+ products across multiple therapeutic segments reducing concentration risk and dependency on single products
Export Potential
Expanding presence in regulated and semi-regulated markets with approved product registrations in 8 countries
Experienced Management
Led by industry veterans with 25+ years of pharmaceutical industry experience and proven track record
Strategic Location
Manufacturing facility located in Gujarat pharmaceutical hub with excellent infrastructure and logistics connectivity
Risk Factors
Regulatory Risk
Pharmaceutical industry is subject to stringent regulatory approvals and compliance requirements which may impact operations and expansion plans
Competition
Intense competition from established players and pricing pressure in generic segment may affect margins and market share
Working Capital Intensive
High inventory requirements and longer collection cycles typical in pharma industry may impact cash flows
Raw Material Dependency
Dependence on imported raw materials and APIs may expose the company to currency fluctuations and supply chain disruptions
Investment Thesis
Investment Positives:
- Strong fundamentals with consistent growth in revenue and profitability over the past 3 years
- Quality manufacturing capabilities with WHO-GMP certification ensuring international standards
- Diversified product portfolio across multiple therapeutic segments reducing dependency risk
- Experienced management team with proven track record in pharmaceutical industry
- Growing export opportunities in emerging markets with regulatory approvals
- Strategic location in Gujarat pharmaceutical hub with excellent infrastructure
- Strong financial metrics with healthy ROE and improving margins
Valuation Analysis:
At the upper price band of ₹90, the company is valued at approximately 15.7x P/E based on FY24 earnings, which appears reasonable compared to listed pharma peers trading at 18-25x P/E. The company's strong growth trajectory and quality operations justify the valuation.
Growth Drivers:
- Expansion of manufacturing capacity to meet growing demand
- Introduction of new products in high-growth therapeutic segments
- Increasing export revenues from new market approvals
- Contract manufacturing opportunities with multinational companies
Investment Recommendation:
The company presents a solid investment opportunity for investors seeking exposure to the growing pharmaceutical sector with a focus on quality manufacturing and export potential. The strong financial performance, experienced management, and growth prospects make it an attractive SME IPO investment.