Accumulate Indoco Remedies; target of Rs 320: Prabhudas Lilladher

Prabhudas Lilladher's research report on Indoco Remedies

We cut our FY25/FY26 EPS by ~37%/14% to factor in low margins and lower sales across key markets. Our numbers do factor in margin recovery with reduction in remediation cost from H2FY25. Indoco Remedies’ (INDR) Q1FY25 EBITDA was sharply below our estimates led by muted US sales and lower GMs. The recent OAI to its Goa unit-2 is negative and will restrict growth in US sales in FY25. We expect 30% PAT CAGR over FY24-26E given low base. At CMP, stock is trading at 20.5x FY26E EPS.

Outlook

We maintain our Accumulate with revised TP of Rs320 valuing at 20x (18x earlier) FY26E EPS. Timely resolution of Goa facility unit-2 is a key for re-rating.