Prabhudas Lilladher has issued a 'Reduce' rating on Sudeep Pharma with a target price of ₹627 in its research report dated May 22, 2026. According to the brokerage's assessment, the stock is currently trading at 35x FY28E EPS, which they consider expensive relative to their valuation of 33x FY28E EPS. The recommendation reflects concerns about the company's near-term growth prospects and current market valuation levels.
Sudeep Pharma delivered robust financial results in Q4FY26, with consolidated revenue of ₹1.8 billion, representing 16% year-on-year growth and 6% quarter-on-quarter growth. For the full fiscal year FY26, the company achieved revenue of ₹6.4 billion, marking 28% YoY growth. The Specialty Ingredients (SI) segment emerged as the standout performer, reporting revenue growth of 105% YoY and 26% QoQ, driven by higher demand across infant nutrition, medical nutrition and dietary supplements. The SI business now contributes approximately 44% to FY26 revenue with largely stable EBIT margins.
The Pharmaceutical, Food & Nutrition (PFN) segment faced challenges, declining 20% YoY and 9% QoQ in Q4FY26. However, management expects EBITDA growth of approximately 15% in the PFN business over FY27 and FY28, supported by higher capacity utilization. The company's pCAM project remains on track for Phase-1 commissioning by April 2027, supported by rising global demand and China+1 sourcing opportunities. Management has guided FY27 EBITDA margins of around 37%, while inventory levels are expected to remain high to support customer demand and ensure raw material availability.
The commissioning of the PFN expansion has been delayed due to customer validation timelines, which are expected to take around 6-12 months. This delay in capacity expansion represents a key operational challenge for the company's growth trajectory. Despite the strong financial performance in Q4FY26, the extended validation period could impact the company's ability to capitalize on its growth opportunities in the near term.
