Buy Ipca Labs; target Rs 358: Angel Broking

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Buy Ipca Labs; target Rs 358: Angel Broking

Angel Broking is bullish on Ipca Labs and has recommended buy rating on the stock with a target price of Rs 358 in its November 2, 2011 research report.

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Angel Broking is bullish on Ipca Labs and has recommended buy rating on the stock with a target price of Rs 358 in its November 2, 2011 research report.

"Ipca Labs (Ipca) reported better-than-expected results for 2QFY2012. The top line grew by 20.2% yoy to Rs 618cr, higher than our estimates. Also, OPM came in higher than expected at 24.6%. However, the company posted a dip of 18% yoy in its net profit due to forex losses during the quarter."

"Ipca reported net sales of Rs 618cr (Rs 514cr), up 20.0% yoy, above our estimate of Rs 530cr. The company posted OPM of 24.6% (22.2%). Recurring profit came in at Rs 77.3cr (Rs 94.0cr), higher than our estimate of Rs 62.5cr. Segment wise, for 2QFY2012, the overall formulations business grew by 23.3% to Rs 489.7cr (Rs 397.0cr), contributing 79.0% (77.2%) to the company's total revenue. The API business witnessed 9.4% growth during the quarter to Rs 128.3cr (Rs 117.3cr), contributing 20.8% (22.8%) to the total revenue. Net profit for the quarter declined by 18% yoy to Rs 77cr."

"We expect net sales to post a 16.3% CAGR to Rs 2,548cr and EPS to register a 14.8% CAGR to Rs 27.5 over FY2011-13E, driven by the US and
domestic markets and the API segment. At current levels, the stock is trading at 16.5x and 12.0x FY2012E and FY2013E earnings, respectively. We recommend Buy on the stock with a target price of Rs 358," says Angel Broking research report.

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To read the full report click on the attachment