Buy Ipca Laboratories; target of Rs 2490: ICICI Direct

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ICICI Direct's research report on Ipca Laboratories

Q3FY21 revenues grew 16.2% YoY to Rs 1410 crore (I-direct estimate: Rs 1374 crore) mainly due to strong YoY growth of 22.0% in export formulation to Rs 431 crore. API sales also posted robust growth of 23.4% YoY to Rs 352 crore. Domestic formulations grew 7.7% to Rs 523 crore. EBITDA margins improved 346 bps YoY to 26.0% (I-direct estimate of 26.1%) due to lower employee and other expenditure partially offset by lower gross margins. Subsequently, EBITDA grew 34.1% YoY to Rs 367 crore (I-direct estimate: Rs 358 crore). PAT grew 34.3% YoY to Rs 266 crore (I-direct estimate: Rs 262 crore) in line with operational performance.

Outlook

We maintain BUY and arrive at our target price of Rs 2490 (earlier TP: Rs 2665) based on 25x FY23E EPS of Rs 99.5.

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