COHANCE - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.6

🧾 Core Financials

Earnings Volatility: PAT dropped from ₹134 Cr to ₹58.6 Cr, a steep 22.4% decline QoQ, signaling near-term pressure.

EPS: ₹12.5 is modest, especially against a high valuation.

Return Metrics: ROCE at 16.0% and ROE at 12.5% are decent, but not standout.

Debt Profile: Debt-to-equity of 0.04 — virtually debt-free, which is a strength.

Cash Flow: Not explicitly stated, but low debt and stable margins suggest manageable cash flows.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 98.9 Extremely overvalued vs. industry PE (33.4)

P/B Ratio ~10.0 High premium over book value

PEG Ratio -4.80 Negative PEG suggests valuation disconnect

Dividend Yield 0.00% No income play

Valuation is stretched, and the negative PEG ratio flags caution despite long-term potential.

🧪 Business Model & Competitive Advantage

Cohance Lifesciences (formerly Suven Pharma) is a contract development and manufacturing organization (CDMO) serving global pharma, biotech, and fine chemical clients. Key strengths include

End-to-end capabilities from early-stage R&D to commercial manufacturing

Strategic acquisitions and favorable business mix driving margin expansion

Positioned to benefit from the China+1 strategy and global outsourcing trends

Despite recent profit pressure, Jefferies remains bullish on the sector, citing structural tailwinds and a long-term revenue CAGR in the high teens

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📉 Recent Developments

Promoter Stake Sale: Jusmiral Holdings (Advent International) sold 8.9% stake via block deals worth ₹3,094 Cr at ₹906/share

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Market Reaction: Stock fell ~6% post-sale, with RSI at 42.3 indicating oversold territory.

FII/DII Sentiment: FII holding dropped 3.82%, DII by 5.20% — signaling institutional caution.

📈 Technical & Sentiment Indicators

MACD: 5.03 – Mild bullish crossover.

Volume Surge – Massive spike (4.45 Cr vs. 90 Lakh avg), driven by block deals.

DMA 50 & 200: Current price is below both, suggesting short-term weakness.

💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹880–₹900, near recent block deal floor price and technical support.

Current Price ₹914: Slightly above ideal entry, but still attractive for long-term accumulation.

🕰️ Long-Term Holding

Accumulate selectively: Strong CDMO fundamentals and global tailwinds support long-term potential.

Watch earnings consistency & promoter activity: Near-term volatility may persist until overhang clears.

You can explore Jefferies’ bullish outlook on Cohance and the CDMO sector or read about the block deal details and promoter stake sale. Let me know if you'd like a peer comparison with Divi’s Labs or Sai Life Sciences.

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