Neutral Ipca Laboratories; target of Rs 1310: Motilal Oswal

Motilal Oswal's research report on Ipca Laboratories

IPCA delivered better-than-expected 1QFY25 earnings. The improved performance in the domestic formulation (DF) segment was offset to some extent by a subdued show in exports and API segment. Unichem also reported YoY sales growth and margin gains. We raise our earnings estimates by 10%/9% for FY25/FY26 factoring in a
robust outperformance in DF, rising profitability of Unichem, a gradual pickup in API segment, and extended benefits of lower RM costs. We value IPCA at 27x 12M forward earnings to arrive at a TP of INR1,310.

Outlook

We raise our earnings estimates by 10%/9% for FY25/FY26, factoring in IPCA’s outperformance in DF, rising profitability of Unichem, a gradual pick-up in API segment, and extended benefits of lower RM costs. We value IPCA at 27x 12M forward earnings to arrive at a TP of INR1,310.