Sai Life Sciences Ltd. is Jefferies’ top pick in the contract research, development, and manufacturing organisation (CRDMO) space, citing its integrated business model, strong growth outlook, and healthy pipeline as key drivers.

The brokerage maintained a ‘Buy’ rating on the stock with a revised price target of ₹1,300 (29 per cent upside) and raised its estimates, increasing its Financial Year 2028 (FY28) sales estimate by 3 per cent and earnings per share estimate by 5 per cent.

Jefferies said Sai Life Sciences follows a proven ‘follow-the-molecule’ model, engaging with clients from the discovery stage and supporting them through commercialisation and lifecycle management. The company has a balanced mix between contract research organisation (CRO) and contract development and manufacturing organisation (CDMO) services at about 35:65, allowing early entry into projects while sustaining growth, it added. 

The brokerage noted that Sai Life remains relatively small compared with its addressable market, with FY25 sales of about $200 million, providing significant room for expansion. Over FY23 to FY26 estimates, the company has delivered a sales compound annual growth rate (CAGR) of 23 per cent and Ebitda CAGR of 57 per cent. Jefferies expects sales and Ebitda to grow at a CAGR of 17 per cent and 20 per cent, respectively, between FY26 and FY28.

The company has also continued to add new projects due to healthy win rates. In FY26, it added seven new molecules, including three commercial molecules and four in Phase III trials. Among the commercial molecules, Sai Life Sciences is believed to be the primary supplier for two, which could become meaningful revenue contributors in the coming years. Jefferies estimates that key pipeline projects could address end-market sales of more than $13 billion by calendar year 2028.

Jefferies added that there is no private equity overhang on the stock after TPG, which held about 39 per cent stake before the initial public offering, fully exited in 2025. The company also benefits from an international presence with around 110 scientists across pharmaceutical hubs such as Boston and Manchester, helping it develop new client relationships.

Sai Life Sciences currently has a net debt-neutral balance sheet, and Jefferies expects leverage to remain below 0.5 times or the company to remain in a net cash position over the next several years despite ongoing capital expenditure. 

Despite delivering about 45 per cent returns since its initial public offering, including listing gains of around 20 per cent, the stock trades at about 47 times FY27 estimated earnings, broadly in line with the sector average of 48-50 times.

Jefferies also sees scope for further earnings upgrades, noting that since initiating coverage on the stock in March 2025 it has raised its FY26 revenue and profit estimates by 17 per cent and 30 per cent, respectively, and FY27 estimates by 19 per cent and 25 per cent. The brokerage said the upgrade cycle could continue as the company converts new sample supplies and an animal health project into larger commercial opportunities.

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