Buy Ipca Laboratories; target Rs 780: Hem Securities
Hem Securities is bullish on Ipca Laboratories and has recommended buy rating on the stock with a target price of Rs 780 in its August 26, 2013 research report.
August 27, 2013 / 18:28 IST
Hem Securities' report on Ipca Laboratories
"Ipca Laboratories is vertically integrated and produces finished dosage forms and Active Pharmaceutical Ingredients. Exports to over 120 countries, now account for nearly 61 percent of its income. The company has posted highest strong quarterly performance for the quarter ending June 2013. The Revenues from operations on consolidated basis increased by around 26 percent at Rs.805.56 crores vs Rs.637.61 crores y-o-y. Operating profit jumped about 21 percent at about Rs.171.02 crores as against Rs.141.78 crores in the previous quarter. Overall R&D cost in this quarter was around Rs.35.16 crores which includes about Rs.3.14 crores of capital expenditure and Rs.32 crores of revenue expenditure. As a result of it operating profit margins declined about 101bps at 21.23 percent. The net profit skyrocketed by 67 percent at Rs.71.77 crore for the quarter as compared to Rs.42.98 crore. EPS for the quarter stood at Rs.5.69. The company incurred a capital expenditure of around Rs.47 crores in the quarter."Also Read: Buy Vaibhav Global; target Rs 240: Hem Securities"Total revenue from formulations business grew by 29 percent at Rs.580.31 crores as against Rs.448.69 crores in Q1FY13. Revenue from domestic branded formulations grew by 12 percent at Rs.250.36 crores from Rs.224.18 crores y-o-y and export formulations revenues surged sharply by 47 percent at Rs.329.95 crores vis-à-vis Rs.224.51 crores. Revenues from API moved up by 17 percent at Rs.212.22 cr. as compared to Rs.181.56 cr. in Q1FY13. Domestic API revenues grew 16 percent at Rs.45.63 cr vs Rs.39.34 cr. y-o-y. Export API revenues jumped by 17 percent at Rs.166.59 cr. from Rs.142.22 cr. in Q1FY13."Valuation: "With robust product pipeline, increasing market share in key products; revival of ani-malaria segment revenues; Ipca Labs Ltd. revenue stream looks visible. Approval of Indore SEZ would be a growth driver in near term. We believe the company is trading at an attractive valuation at 17.21x and 13.95x of FY14EPS of Rs.36.21 and FY15EPS of Rs.44.68. We initiate a 'BUY' on the stock with a target price of Rs 780 (appreciation of about 25 percent) with the medium to long term investment horizon," says Hem Securities research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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