- Target
- ₹620
- At report
- ₹500+24% printed
- Vs our close
- +2.5%
ICICI Securities retains BUY on Indegene after Q4FY26 showed robust, broad-based revenue growth across ECS/EMS and signs that top-client weakness has abated, even as EBIT margin of 12.1% came in below estimate on lower gross margin. The broker rolls forward to a Mar'27E TP of INR620 (24x one-year-forward P/E), citing reduced policy overhang on health-tech, smooth integration of acquired entities, and industry-high revenue per employee.
- Sequential revenue growth of 3.4%/6.5% USD/INR beat ICICI Securities' estimate of 2%/6.3%; growth was broad-based across ECS/EMS, up 4.4%/3.4% QoQ USD respectively
- Top client returned to growth (+1.2% QoQ USD) after two quarters of weakness; total clients rose to 91, with 5 added QoQ and minimal churn
- EBIT margin of 12.1% (down 60bps QoQ) missed the 12.9% estimate on a 270bps QoQ decline in gross margin and lower INR realisation; margin expected to rebound in H2FY26 as one-time acquisition costs reduce
- Pharma industry demand guided at 5-8% CAGR FY26-28E, with a stronger, more diversified deal pipeline reducing concentration risk; company bagged 7 large deals (USD1mn+) in the quarter, including a large German Tectonic-led win
- AI adoption (Tectonic platform) cut content/brief writing turnaround from a 3-month cycle to 3 days, supporting faster go-to-market and market-share gains
- Rolls over to Mar'27E TP of INR620 (from INR580) with Q5-Q8 EPS of INR26/share, based on a one-year forward P/E of 24x
- Any new adverse policy changes affecting the health-tech/pharma sector
- M&A-led margin impact from ongoing acquisition integration
- Sales INR10,034mn (USD110mn), up 32.8% YoY, up 6.5% QoQ
- EBIT INR1,218mn, margin 12.1%, down 464bps YoY and 58bps QoQ
- Reported PAT INR797mn, down 32.2% YoY and 22.5% QoQ, including an INR203mn exceptional lawsuit-related cost
- FY26 revenue grew 18.2% YoY in USD terms (vs 7.4% in FY25); ex-Biopharma revenue growth was 11.8%
- FY26 EBITDA margin 17.8%, down 100bps YoY
- Company proposed a final dividend of INR2.25/share; DSO at a record-low 63 days
- BioPharm acquisition completed ahead of schedule in Feb'26; Born and Cake acquisitions expanded European geography presence
- Large German customer engagement won via the Tectonic platform, expected to be a material FY27 revenue driver
- Emerging biotech segment grew 25%+ sequentially over the last 3 quarters as US biotech demand recovers from a soft patch
- Revenue per employee for FY26 rose to USD75k from USD67k in FY25, supporting margin/productivity narrative
| Broker estimates | Unit | FY25A | FY26A | FY27E | FY28E |
|---|---|---|---|---|---|
| Net Revenue | INR mn | 28,393 | 35,105 | 43,559 | 49,011 |
| EBITDA | INR mn | 5,343 | 6,189 | 7,631 | 9,377 |
| EBITDA Margin | % | 18.8 | 17.6 | 17.5 | 19.1 |
| Net Profit | INR mn | 4,067 | 4,213 | 4,910 | 6,269 |
| EPS | INR | 17.1 | 16.7 | 20.5 | 26.2 |
| P/E | x | 29.2 | 29.9 | 24.4 | 19.1 |
| EV/EBITDA | x | 18.8 | 16.4 | 12.9 | 9.9 |
| RoCE | % | 15.4 | 13.1 | 12.9 | 14.4 |
| RoE | % | 20.1 | 14.6 | 14.6 | 16.3 |
Valuation: 24x one-year forward P/E. ICICI Securities rolls over to a Mar'27E TP of INR620 using Q5-Q8 EPS of INR26/share on a one-year forward P/E of 24x. ICICI Securities raised FY27E/FY28E revenue estimates by 1.4% each, EBIT by 0.8%/1.8%, and diluted EPS by 2.5%/3.7% respectively versus its prior estimates.
Extraction note: Previous TP was INR580 per the report's title-line notation 'Target Price 620 (580)'; used for context though not requested as a separate field.