ICICI Securities has increased its price target for Sudeep Pharma to ₹1,100, citing better profit margins and growth in the Pharmaceutical and Food Nutrition segment. While the core nutrition business remains strong, investors are watching for a recovery in the specialty ingredients unit and the timely launch of the upcoming battery materials facility in April 2027.
ICICI Securities has revised its price target for Sudeep Pharma to ₹1,100, balancing positive momentum in its core nutrition business against ongoing operational hurdles in other segments. The brokerage has maintained a “Hold” rating on the stock, noting that while the company is showing improved operational maturity, it still faces specific business challenges.
Financial performance in the second quarter of fiscal year 2027 saw a 20.9% year-on-year revenue increase, primarily led by the Pharmaceutical and Food Nutrition (PFN) division. A key highlight for investors is the improvement in operating margins, which rose by 310 basis points to reach 37.2%. This margin expansion reflects the company's effective cost management strategies and a shift toward selling a more profitable product mix, even as it continues to navigate persistent freight cost pressures.
Despite the growth in the nutrition business, the specialty ingredients segment experienced a decline. This weakness was attributed to the temporary suspension of a fortified rice program and sluggish performance at the NSS unit. Market observers will be looking for a turnaround in this segment during the second half of fiscal year 2027, as the company works to leverage newly secured customer contracts to drive a recovery.
The long-term growth outlook for the company remains centered on the upcoming battery materials facility. With commercial operations slated for April 2027, management has reported high visibility of demand for these new products. This project represents a significant strategic shift for the company, and its successful execution is a primary monitorable for shareholders. Additionally, the company is currently awaiting US FDA approval for its greenfield facility in Gujarat, which is another crucial operational milestone that could impact future performance.
At a valuation of 40 times the estimated 2029 earnings, the stock is pricing in a strong growth trajectory. The eventual benefit to shareholders will depend on the company's ability to maintain these margin gains, successfully launch the battery materials plant, and revive the specialty ingredients segment.