Buy Ipca Labs; target of Rs 435: Angel Broking

Angel Broking is bullish on Ipca Labs and has recommended buy rating on the stock with a target of Rs 435 in its June 1, 2012 research report.

“For 4QFY2012, Ipca Labs (Ipca) reported lower -than-expected results. The top line grew by 16.7% yoy to Rs553cr, below in-line with our estimates. Also, OPM came in lower than expected at 18.7%. This also resulted in adjusted net profit growth coming in at 14.8% yoy, ending the period at Rs77cr. We recommend Buy on the stock.”

“Ipca reported net sales of Rs553cr, up 16.7% yoy, lower in-line with our estimate of Rs673cr. The company posted OPM of 18.7% vs. expected 20.7%.Recurring profit came in at Rs77cr, lower than our estimate of Rs114cr. Segment wise, for 4QFY2012, the overall formulations business grew by 9.0% to Rs386cr (Rs356cr), contributing 70.0% to the company’s total revenue. The API business witnessed 8.0% growth during the quarter to Rs127.7cr, contributing 22.9% to the total revenue. Adjusted net profit for the quarter grew by 14.8% yoy to Rs77cr.”

“We expect net sales to post a 22.5% CAGR to Rs3,474cr and EPS to register a 28.7% CAGR to Rs36.3 over FY2012–14E, driven by the U.S. and domestic markets and the API segment. At current levels, the stock is trading at 10.7x and 9.4x FY2013E and FY2014E earnings, respectively. We recommend Buy on the stock with a price of Rs435,” says Angel Broking research report.   

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