Dolat Capital recommended accumulate rating on IPCA Laboratories with a target price of Rs 2106 in its research report dated August 12, 2020.
Dolat Capital's research report on IPCA Laboratories
IPCA’s Q1FY21 numbers beat our estimates across all fronts led by one-time Rs2.6bn revenue from HCQ supplies (both in India and exports). Even excluding HCQ, growth was strong at 18% YoY with EBITDA margins of 25%. For FY21E, management has revised its guidance upwards to 18-20% revenue growth and EBITDA margin at ~23% led by: 1) strong growth in exports (both formulations and API); 2) order visibility from global fund tender; 3) improving asset utilization (Piparia and Pithampur running at 20% capacity) and cost optimization measures.
This will provide IPCA with significant financial capacity to step-up growth investments if the opportunities arise. Also, we estimate the return ratios will improve to 20%+. Maintain ACCUMULATE.
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