Alivus Lifesciences Ltd Ltd Quarterly Results Q4 FY 25 stock analysis

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Sector Outlook: Positive

Domestic formulation & CDMO continues to deliver strong growth

Alivus Life Sciences reported a revenue growth of 21.0% YoY / up 1.2% QoQ to Rs. 6,495 mn, marginally above our expectations of Rs. 6,420 mn. The company witnessed broad-based revenue growth coming from all regions. GPL and non-GPL businesses grew at 31% YoY and 19% YoY, respectively. The generic business grew 22.6% YoY, while the CDMO business rose 22.6%. From a geographical perspective, growth was well distributed, with India, Europe, Japan, and ROW all playing significant roles in this growth. EBITDA increased 40.3% YoY / up 4.3% QoQ to Rs. 1,984 mn, while EBITDA margin stood at 30.5% (above 419bps YoY / up90bps QoQ) in Q4FY25, aided by expansion in gross margins by 98bps YoY to 30.5%. Profit after Tax stood at Rs. 1,419 mn (up 44.9% YoY / up 3.6% QoQ) in Q4FY25. PAT margin came at 21.8% versus 21.3% in the previous quarter. One of the most encouraging outcomes this year was our ability to maintain EBITDA margins at 30%, even in the absence of PLI benefits and amid market headwinds. This reflects its diversified portfolio’s strength and continued focus on operational efficiency. Looking ahead at FY26, the company expect volume growth in mid-teens. However, given the pricing pressure, expect the revenue growth to be in the high single digits.

Key Concall Highlights

New Generic APIs launches:

Alivus Life Sciences continues to build a strong foundation for sustained growth through focused efforts on new product development. In FY25 and into FY26, the company has launched several generic APIs seeded with customers nearly four to five years ago, in alignment with patent expirations across regulated markets. These product launches have contributed meaningfully to growth and are expected to drive volumes as more markets open up in FY26.

Therapy mix:

The company’s therapeutic mix, the Cardiovascular and CNS segments, remained dominant, contributing around 55% to the top line. Urology and niche therapies also gained traction, supporting therapy diversification.

Addressable market opportunity:

The company’s high-potency API (HPAPI) pipeline is also advancing steadily, with 24 products under development targeting a total addressable market of approximately $49 billion. Out of these, seven are already validated, five are in advanced development, and twelve are progressing through lab-scale stages, with significant commercial launches expected to begin from FY28 onwards.

Strong Client Relationship:

Alivus maintains deep and stable relationships with top global and Indian generic players, positioning itself as a first- and second-source API supplier. The company is closely aligned with customer needs, often engaging early in the product lifecycle, which enables smoother integration into customer filings and long-term supply agreements.

CDMO Outlook:

On the CDMO front, while FY25 saw some softness due to customer destocking and the inherently cyclical nature of the business, momentum is expected to pick up meaningfully in H2FY26. The company currently operates with three commercial CDMO products, with a four already commercialized and ramping up, and a fifth project expected to receive regulatory approval in H2FY26. Furthermore, Alivus is engaged in several advanced discussions with potential partners and expects to add more projects in FY27, keeping it on track for substantial CDMO growth in the medium term. The management remains positive that CDMO will be a significant value contributor, aided by differentiated capabilities and strong execution.

Capex Plan:

The company has laid out an aggressive capex plan to scale its manufacturing and R&D capabilities to support future growth. For FY26, the company has earmarked an investment of Rs. 600 crores. The bulk of this capex will go toward brownfield expansions at its existing API manufacturing sites in Ankleshwar and Dahej, which are expected to come online by the third quarter of FY26. Additionally, the company is undertaking a greenfield expansion in Solapur, with Phase1 expected to be commissioned in Q4FY26.

Ankleshwar Facility Update:

A notable development was the successful completion of a USFDA inspection at the Ankleshwar facility, resulting in the issuance of an Establishment Inspection Report, reaffirming the site’s regulatory compliance and readiness for future growth.

Valuation and Outlook

Alivus Life Sciences maintains a robust growth trajectory, backed by a strong API and CDMO portfolio. The company reported a strong revenue growth in Q4FY25, and closed FY25 with revenue reflecting a 4.5% YoY increase in line with guidance. Despite the withdrawal of PLI benefits, Alivus maintained a healthy % EBITDA margin of 30%, demonstrating operational efficiency and a resilient product mix. As we advance, the company anticipates mid-teen volume growth in FY26, though revenue growth is expected in high single digits due to ongoing pricing pressure. The CDMO business remains a key focus area, with new projects gradually scaling and a fifth project expected to commercialize in H2FY26. The company has lined up substantial capex in FY26 for brownfield expansion in Dahej and Ankleshwar, a greenfield project in Solapur, and a new R&D centre near Mumbai. With a clear expansion roadmap, deep customer relationships, and Nirma’s operational expertise driving efficiencies, Alivus is well-positioned to bridge the valuation gap with global CDMO players. Overall, Alivus Life Sciences presents a combination of financial strength, growth visibility, and strategic expansion into premium pharmaceutical segments, making it an attractive long-term growth play. We, thus, believe Alivus is well-positioned to emerge as a key player in the global API and CDMO landscape in the coming years. We value the company at 27x FY25e EPS and arrive at a TP of Rs. 1,382 per share, implying an upside of 20%.