Accumulate Ipca Laboratories; target of Rs 1700 Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Ipca Laboratories with a target price of Rs 1700 in its research report dated November 18, 2024.

Broker Research

November 18, 2024 / 09:47 IST

Accumulate

26 Aug, 2025 12:21

Volume

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Prabhudas Lilladher's research report on Ipca Laboratories

Ipca Labs (IPCA) Q2 EBITDA of Rs4.5bn was 5% below our estimate. However, management maintained its guidance of 9% revenue growth (excluding Unichem and other subs) while further increased its margin guidance by 100 bps for FY25. Our FY25E and FY26E EPS marginally stands increased by 2-3%. The broad based revenue growth in Q2 provides comfort while export API and branded generic should recover in coming quarters. Domestic formulation business, which now contributes 40% of revenues and ~ 60% of EBITDA, continues to outperform and grow at healthy levels. Turnaround in Unichem is on track with margins scale up from 6% at time of acquisition to +12% in Q2.

Outlook

At CMP, the stock is trading at 16x EV/EBITDA on FY27E adjusted for Unichem stake and 26x P/E adjusted for Unichem amortization on FY27E. Considering 27% EPS CAGR over FY24-27E and reasonable valuations, we upgrade stock from Reduce to ACCUMULATE with revised TP of Rs1,700/share, valuing at 18x EV/EBITDA adj for Unichem stake based on FY27E.

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