Ipca’s Q1FY2025 overall performance was above our estimates. Sales grew 32.9% y-o-y to Rs. 2,092 crore, EBITDA increased 28% y-o-y to Rs. 392 crore, and APAT rose 17% y-o-y to Rs. 192 crore. Segment-wise growth was seen across regions, where domestic branded formulation grew 12%, surpassing IPM growth of 8-9%. In the international segment, institution grew by 19%, offset by generic formulation declining 5%. A healthy product mix, raw-material cost rationalisation, and Unichem’s profitability led to a 200bps y-o-y increase in gross margin to 69.2%; subsequently, EBITDA margin fell 60bps y-o-y to 18.8%. Management has increased its overall EBITDA margin guidance to 20.5-21% for FY2025E.
OutlookUnichem business reported a healthy turnaround and resurgence of U.S. sales is expected to increase EBITDA margin to 21.5% by FY2026; hence, we maintain BUY. Currently, the stock is trading at ~35.6x/27.5x its FY2025E/FY2026E EPS and we ascribe a P/E of 32x to arrive at a PT of Rs. 1,600.
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