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Nomura raises Ipca Labs price target on hope of strong earnings growth ahead

Japanese brokerage house Nomura has retained its buy call on Ipca Laboratories and raised price target to Rs 1,005 from Rs 915 apiece after revising earnings growth estimates upward.

February 18, 2019 / 09:02 AM IST
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Japanese brokerage house Nomura has retained its buy call on Ipca Laboratories and raised price target to Rs 1,005 from Rs 915 apiece after revising earnings growth estimates upward.

Company's sustained revenue growth should assist EBITDA margin expansion and hence it revised earnings estimate for FY19/20/21 by 29 /13 /11 percent, the brokerage said.

It expects company to deliver 43 percent earnings CAGR over FY18-21, but it has not factored in warning letter resolution & commencement of supplies to US.

Nomura, however, reduced its valuation multiple from 20x earlier to 18x.

Ipca Laboratories reported a massive 51.7 percent on year growth in its third quarter profit to Rs 160.2 crore, and 10.2 percent increase in revenue from operations to Rs 947.6 crore YoY, aided by domestic and branded formulations, and APIs exports.

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Ipca had said domestic formulations business, which contributed 45 percent to total revenue, registered a 10 percent growth during the quarter YoY.

Branded exports revenue grew by 41 percent and active pharmaceutical ingredient (API) exports increased 40 percent YoY, it added.

At operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) jumped 43.4 percent to Rs 231.7 crore and margin expanded by 540 bps to 24.2 percent in quarter ended December 2018 YoY.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Feb 18, 2019 09:02 am

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