Ipca Laboratories Ltd. share price target

EPS increased by 33%/2% for FY21/22E while 6% decreased for FY23E. 1QFY21 earnings was much higher than our estimate due to 1) incremental revenue of Rs2.59bn related to HCQS and CQ supply 2) better gross margin...

Ipca Laboratories Limited (IPCA) reported a stellar performance for the quarter backed by impressive growth in the API segment. The revenues at Rs 1534 crore grew by 42.3% y-o-y on the back of sturdy 72% y-o-y growth in the API segment, while the formulations business was up by 36.6% y-o-y. The operating profit was up 195% y-o-y to Rs 587 crore. The operating margins surprised positively expanding by 1983 BPS y-o-y to 38.3%, attributable to favorable mix, low costs and expansion in gross margins. Strong operating performance percolated to the bottom line as well. Therefore the PAT at Rs 445 cr was up 243% y-o-y and was ahead of estimates. IPCA has guided for...

Growth in export formulations (28% of FY20 revenues) was on the back of growth in both international generics and international branded formulations. The international anti-malarial institutional business has also contributed substantially to overall exports growth. US traction will take more time than earlier estimated due to USFDA import alerts for the Ratlam facility that is the only API source for Silvassa and Pithampur formulations plants along with Silvassa and Pithampur (Indore) plants that are specifically earmarked for the US business, besides third party sales. However,...

Strong Revenue Growth in Domestic Formulations and APIs: In Q4FY20, total revenues of IPCA Labs increased by 20.5% YoY to Rs. 10.05 bn mainly due to strong performance in domestic formulations and API business.

at Rs1,839(earlier Rs1,728) on 26x PE of FY22E and upgrade to Buy (earlier Accumulate) due to marginal change in earnings estimate. Strong performance by Domestic formulation and API segment in Q4FY20: Revenue grew 21% YoY to Rs10.0bn (PLe Rs8.8bn) with domestic formulations and API business reporting strong growth of 21% and 30% YoY.EBITDA growth was 10% YoY to Rs1.92bn (PLe Rs1.56bn) and EBITDA margin was 19.2%(PLe 17.7%) versus 21% in Q4FY19.During the quarter, IPCA incurred impairment and...

Robust top-line growth; guided for strong FY21 IPCA's Q4FY20 numbers beat our estimates on top-line while adjusted for one-offs (impairment for US subsidiary and forex loss) margins at 20.5% came in line. Top line grew a strong 22% YoY led by: i) generic formulations (up 41% YoY), API (30% YoY); and ii) domestic formulations (21% YoY growth, while delay in shipment due to lockdown impacted branded exports to the tune of Rs260mn. HCQ supplies (both in India and exports) and higher sales from anti-malarial and anti-bacterial segments aided...

17 June 2020 Ipca Laboratories (IPCA) ended FY20 on a strong note, with 42% YoY growth witnessed in earnings to INR6.5b. This was led by 16% YoY growth in Domestic Formulations (40% of sales), 32% YoY growth in the API segment (20% of sales), and healthy improvement in profitability. IPCA remains on track to improve MR productivity in DF, with cost efficiency expanding the business scope in API and International Generics. We remain positive on the company owing to the sustained outperformance of the DF segment, improved growth prospects in API, and better operating leverage. Maintain Buy. YoY, led by strong growth in the Exports (Generics), API, and DF businesses, partially offset by decline in Branded and Institutional exports. Exports (Generics) grew 40% YoY to INR1.7b (15% of sales) and DF sales 21% YoY to INR4.3b (40% of sales). API grew 30% YoY to INR2.8b (26% of sales) for the quarter, with Export APIs growing at 27% and Domestic APIs at 41%.

Ipca Laboratories Limited (Ipca) reported weak performance for the quarter. Revenues stood at Rs 1073.8 cr, up by 22% y-o-y. The growth in the topline was driven by a strong 17% and 30% growth in the formulations and the API segment respectively. The operating margins for the quarter contracted steeply to 15.7% attributable to higher employee costs and higher other expense. Consequently operating profit for the quarter at Rs 168.5 cr grew by a meager 2.4%. Higher depreciation charge coupled with a weak operating performance resulted in the PAT declining by 12.7% y-o-y to Rs 86 cr and missing estimates. IPCA has guided...

Price fix of 40 formulations by NPPA will not have an impact on listed entities. With the disruption in productions, logistical movement and manpower scarcity, IPM growth declined in first two months of FY21E. The severity of declining trend is visible in 1) acute-heavy portfolios, 2) top premium brands (with alternative cheaper/generic drugs), 3) drugs used in hospital surgeries, 4) secondary therapies like Derma, Opthal, vaccines, stimulants and hormones whose treatment can be delayed. Key listed companies such as Alkem, GlaxoSmithKline, Alembic, FDC, Indoco are to be impacted in...

On the business front, despite the nationwide lockdown, domestic growth is expected to remain more or less stable. Exports growth, barring for one or two months due to congestion in all major ports globally, is also expected to remain strong due to 1) currency benefit, 2) slowdown in competition due to delay in new approvals that will be beneficial for existing players and 3) expected demand continuum across the world despite Covid-19. Some windfall is also expected in some critical productsa case in point is Hydroxychloroquine, a malaria drug that is likely to be repurposed as a prophylaxis for Covid-19 treatment in some cases....