Ipca Labs eyes 20% export growth in second half of FY12

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Ipca Labs eyes 20% export growth in second half of FY12

Executive Director of Ipca Labs AK Jain tells CNBC-TV18 that they aim to grow exports by 20% in the second half of the current fiscal year.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Ipca Labs See previous management interviews See what other Experts & Brokerages are saying about Ipca Labs Ipca Labs BSE | NSE 30/05/12 Are Mutual Funds betting on Ipca Labs?

Even though the company posted disappointing Q2 results , rating agency CLSA upgraded Ipca Labs to a 'buy' rating, which has pushed the midcap pharmaceutical company into the limelight.

A point which most brokerages have highlighted is the export growth of the company. In an exclusive interview to CNBC-TV18, executive director AK Jain said that exports, which grew by 49% in Q2, helped boost overall growth in the quarter to about 20%. "Malarial season was a completely failure this year and that was one of the main reasons for our overall domestic business not doing well," he explained.

Going forward, Jain says that he expects to achieve the company's export growth guidance of 18-20% for the whole year, with 20% plus growth for the remaining two quarters of the current financial year.

Below is an edited transcript of his interview with Sonia Shenoy and Ekta Batra. Also watch the accompanying video.

Q: It's the domestic formulation business which hasn't done that well this quarter which is up around 3.3%. Just take us through what's happening on that front?

A: The anti-malarial business this quarter is very high. This year malarial season was completely failure and that was one of the main reasons for our overall domestic business not doing well.

But on exports front we have done very well. Exports for the quarter gone by were up by almost around more than 49%. Therefore the overall business growth for the quarter is almost around 20%.

Q: A couple of brokerages have highlighted that the key growth trajectory for Ipca Labs is what's happening on the export front. How much do you think you could do for the whole year and in exports specifically?

A: Our guideline for the growth was around 18-20%. Right now we are around 23% growth overall for the company as a whole. What we are looking for is we should be able to grow around 20% plus for the remaining two quarters of the current financial year.

Q: What would you do on the margin front then? What can we expect going forward?

A: Our margins have expanded by almost around 1.74%. By and large we are much better than guidelines and even in the remaining quarters also we will have a margin expansion.

Q: There are some brokerage reports which peg your net profits to be in the line of Rs 255 crore in this year and Rs 320 crore in the following year. Is that a safe estimate to work with?

A: Normally we don't give any guidelines on profits. What we give is guidelines on the EBITDA margins only and they will expand. In the past six months, it has expanded by almost around 1.74%. For setting up, we are looking for more than 1% expansion in EBITDA margins.

Q: Just wanted to move away from the earnings for a second and wanted to get your thoughts with regards to the Draft NPP guidelines which have come out. Would that affect Ipca Labs in any?

A: Almost around 67% of our portfolio will be coming under price control but by and large we are not on the top end of the prices. The prices are going to be fixed based on the average of top three market prices. So except for one or two segments where we are the leaders, that will not make any significant difference as far as we are concerned. We welcome the policy.