SSKI - Nicholas Piramal

Nicholas Piramal India's (NPIL) growth strategy involves partnering with global Innovators for providing Contract Research and Manufacturing (CRAMS) services. NPIL has built unique capabilities across the formulations development value chain with manufacturing assets in UK and India. After the initial hiccups, we believe the CMS business is on track with CMS revenues exceeding US $200m in FY07. We see accelerated growth ahead, well supported by steady domestic sales and strong discovery R&D capabilities. We estimate 17% CAGR in NPIL's consolidated revenues and 26% CAGR in earnings over FY07-09. Reiterate Outperformer with a price target of Rs353 (24.1x FY08E and 20x FY09E earnings).