Indoco Remedies Ltd. share price target

IPM is struggling for growth above 10% even after MoM abating COVID concerns and with MRs, physician activities almost reaching pre-COVID level. We believe key reasons for growth below par are (i) subdued new prescription (Rx) leading to volume de-growth (ii) digital marketing yield going south and (iii) sustained lower demand of acute products. Cardiac and anti-diabetic growth takes a breather in Jan-21 at 8.8% and 5.3% after reporting double digit growth in most months during lockdown. While amongst top therapies Gastro and VMN reported double digit growth of 14%...

H1 growth was led by strong growth in export markets (albeit on lower base), strong gross margins and lower travel & promotional spends. The management has guided for significant export growth and margin improvement for FY21. After going through rough patches in FY18-19, where Indoco faced headwinds on the domestic front (structural issues) and exports front (regulatory setbacks), the situation is returning to normalcy. While FY21 growth in the domestic market is likely to be subdued due to Covid-19, exports are likely to deliver robust growth on the back of strong...

Valuation and Risks: We upgrade our Revenues for FY21E/FY22E by 0.9%/0.7% to Rs. 13.3 Bn / Rs. 16.8 Bn due to upgrade in US markets.

1QFY21 earnings were mixed with revenue lower than our estimate but EBITDA and PAT higher due to higher gross margin and lower SG&A.; INDR's key growth driver for FY22E India formulation declined by 9% (55% of revenue) YoY even after restructuring its marketing divisions and sales team with new taxonomy of portfolio, focus and allotment of MRs (including additional headcounts). Europe has already made a strong comeback with...

India formulations growth core to overall growth Domestic formulations (~63% of FY20 revenues) grew at 6.5% CAGR in FY16-20. The subdued growth can be attributed to high concentration of acute therapies and one of the lowest MR productivity. With a market share of ~0.7% and overall rank of 29, the company is still a marginal player with some top brands in smaller categories like stomatologicals. However, with a positive outcome of restructuring exercise and likely improvement in MR productivity besides therapy calibration, we expect Indian formulations to...

Decent Revenue Traction:Indoco Remedies (Indoco) revenues increased by 7.9% on a YoY basis to Rs. 2.72 bn due to domestic formulations and US.

India formulations growth core to overall growth Domestic formulations (~63% of FY20 revenues) grew at 6.5% CAGR in FY16-20. The subdued growth can be attributed to high concentration of acute therapies and one of the lowest MR productivity. With a market share of ~0.7% and overall rank of 29, the company is still a marginal player with some top brands in smaller categories like stomatologicals. However, with a positive outcome of restructuring exercise and likely improvement in MR productivity besides therapy calibration, we expect Indian formulations to...

We maintain HOLD on INDR and wait for more visibility post Q1FY21E considering that this quarter is usually weak due to seasonality effect plus COVID scenario could possibly lead to a double blow. FY20 was a recovery and CAPEX phase for INDR given 1) Remediation work for its Goa facility 2) Expansion of API segment with Patalganga Unit 3) Restructuring of Domestic...

India formulations growth core to overall growth Domestic formulations (~63% of FY19 revenues) grew at 4.4% CAGR in FY16-19. The subdued growth can be attributed to high concentration of acute therapies and one of the lowest MR productivity. With a market share of ~0.7% and overall rank of 29, the company is still a marginal player with some top brands in smaller categories like stomatologicals. However, with a positive outcome of restructuring exercise and likely improvement in MR...

Indoco Remedies net revenues increased by 24 percent YoY to Rs 2926 mn (higherthan our estimate of Rs 2814 mn) in Q2FY20 due to robust revenue traction inDomestic, International and API business.