Buy IPCA Laboratories; target Rs 581: Firstcall Research

Firstcall Research is bullish on IPCA Laboratories and has recommended buy rating on the stock with a target price of Rs 581 in its March 18, 2013 research report.

"IPCA Laboratories is a fully-integrated Indian pharma company manufacturing over 350 formulations and 80 APIs for various therapeutic segments. The Company has posted a net profit of Rs. 878.90 million for the quarter ended December 31, 2012 where as the same was at Rs. 639.30 million for the quarter ended December 31, 2011. Total Income is Rs. 7049.90 million for the quarter ended December 31, 2012 where as the same was at Rs. 6188.60 million for the quarter ended December 31, 2011. Domestic formulations income for the quarter of IPCA is up 13% at Rs. 2127.30 mn. Exports income for the quarter of IPCA is up 16% at Rs. 4423.70 millions. Ipca is a pharmaceutical company with a strong thrust on exports which now account for 60% of Company's income. Net Sales and PAT of the company are expected to grow at a CAGR of 18% and 14% over 2011 to 2014E respectively. IPCA Labs Ltd has international client roster includes global pharmaceutical giants like AstraZeneca, GlaxoSmithKline, Merck, Roche and Sanofi Aventis."

"The company's net profit jumps to Rs.878.90 million against Rs.639.60 million in the corresponding quarter ending of previous year, an increase of 37.41%. Revenue for the quarter rose 14.02% to Rs.7010.20 million from Rs.6148.30 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.6.97 a share during the quarter, registering 36.92% increase over previous year period. EBITDA is Rs.1437.70 millions as against Rs.1552.40 millions in the corresponding period of the previous year."

Outlook and Conclusion: At the current market price of Rs.514.00, the stock P/E ratio is at 19.15 x FY13E and 16.68 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.26.85 and Rs.30.82 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 18% and 14% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 12.64 x for FY13E and 11.00 x for FY14E. Price to Book Value of the stock is expected to be at 4.05 x and 3.26 x respectively for FY13E and FY14E. We recommend 'BUY' in this particular scrip with a target price of Rs 581 for medium to long term investment," says Firstcall Research report.

Institutional holding more than 40% in Indian cos

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