Should you bet on Piramal Pharma's lofty growth guidance?

Piramal Pharma, the priciest mid-cap pharma stock in the current market, is turning heads on Dalal Street with its recent growth guidance. The company said it will double its revenue and triple its EBITDA (earnings before interest, tax, depreciation and amortisation) to nearly Rs 16,000 crore and Rs 3,600 crore, respectively, by FY30— a growth of 12 and 20 per cent per annum, respectively, in the next six years. Investors concur with the management's confidence. The stock has more than doubled over the last year. Its market cap has leapt to Rs 30,000 crore, despite a meagre profit of Rs 28 crore for 12 months ending June 2024 (due to higher than usual tax liability). The result is an astronomical P/E ratio of 1,082 as of September 30, 2024. It is natural to wonder if the exuberance is truly justified. We examine that in the story. But first, let's understand t