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On Thursday, Investec (LON:INVP) began coverage on OneSource Specialty Pharma Ltd (ONESOURC:IN), issuing a Buy rating and setting a price target of INR 2,000.00 per share. The firm’s analyst highlighted OneSource’s strategic positioning to benefit from the growing market for generic GLP-1 treatments, noting the company’s pivotal moment in earnings growth.
OneSource has established approximately 20 partnerships for the production of GLP-1 drugs, such as liraglutide and semaglutide, capitalizing on its limited fill-and-finish capacities. Investec’s analysis points to a significant revenue opportunity starting in 2026 with the commercialization of its semaglutide generics (sema Gx) within the Diabetes Disease Management (DDC) business. This development is expected to potentially triple OneSource’s EBITDA by the fiscal year 2028 compared to fiscal year 2025.
The DDC segment is projected to be the primary driver of this growth, contributing roughly 50% of the estimated EBITDA for fiscal year 2027. Meanwhile, other business areas such as Biosimilars, Sterile Injections, and Softgel are anticipated to grow at a rate exceeding 20%. The firm is optimistic regarding OneSource’s sema Gx prospects, particularly in emerging markets and Canada, where many Indian and global companies are dependent on OneSource’s production capacities.
For the DDC segment, Investec has incorporated conservative assumptions for utilization and pricing into its forecasts but acknowledges the potential for higher-than-expected performance. The analyst’s valuation of OneSource is based on 23 times the projected EBITDA for fiscal year 2027, which represents a 10%+ discount compared to the average Contract Development and Manufacturing Organization (CDMO) multiples, reflecting the high growth potential and the promising GLP-1 market opportunity.
The primary risk identified by Investec is the possibility of approval delays which could impact the anticipated growth trajectory and market opportunities for OneSource.
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