Pharma stock jumps 4% after it announces merger with Cohance Lifesciences

A leading pharmaceutical company has merged with Cohance Lifesciences to create India’s largest Contract Development and Manufacturing Organization (CDMO). This strategic merger is set to enhance their capabilities, expand market reach, and position the combined entity as a key player in the global pharmaceutical manufacturing sector.

Share Price Movement 

During Friday’s trading session, Suven Pharmaceuticals Ltd’s share price hit an intraday high of Rs.1,158.00 apiece, rising 4.4 percent from the previous close of Rs.1,109.30 apiece. The share has retreated slightly since then and is currently trading at Rs.1,152.00 per share. Over the past five years, the stock has delivered over 1,000 returns. 

Merger Details 

Shares of Suven Pharma rose 2.5 percent in the morning session following the announcement that the Board of Directors of Suven Pharmaceuticals Limited (Transferee Company) has approved the Scheme of Amalgamation with Cohance Lifesciences Limited (Transferor Company). The merger is expected to conclude within 12-15 months, subject to shareholder and regulatory approvals. 

Cohance, a contract development and manufacturing organization (CDMO) and merchant Active Pharmaceutical Ingredient (API) platform, is a global leader in select low-mid volume molecules and has unique capabilities, including its antibody-drug conjugates (ADC) platform. The merger will establish Suven as a diversified leader in the CDMO and API sectors in India, significantly expanding its revenue base. The combined entity is expected to be one of India’s leading integrated CDMO players. 

With an expanded capacity of 2,650 kL and a broadened customer base, substantial scale and synergy benefits are anticipated. Upon the merger’s completion, shareholders of Cohance will receive 11 shares of Suven for every 295 shares of Cohance, based on the swap ratio. Suven’s new shares will be listed on both NSE and BSE, with Advent owning 66.7 percent and public shareholders holding 33.3 percent of the merged entity (pre-ESOP dilution).

Also read: BSE share skyrockets over 17% today; check the 2 key reasons behind the surge

Financial Overview

In its recent financial update, Suven Pharmaceuticals Ltd reported consolidated revenue of Rs.307 crores for Q3 FY25, reflecting an increase of 39 percent compared to Rs.220 crores in Q3 FY24. Similarly, the company recorded a net profit of Rs.83 crores, rising 77 percent from Rs.47 crores posted during the same period last year.

Ratio Analysis

The company has a Return on Capital Employed (ROCE) of 15.28 percent and a Return on Equity (ROE) of 12.29 percent. Its Price-to-Earnings (P/E) ratio stands at 101.12, higher than the industry average of 35.67. Furthermore, the company maintains a current ratio of 5.09, a debt-to-equity ratio of 0.02, and an Earnings Per Share (EPS) of Rs.10.97. 

Written by – Siddesh S Raskar

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