Accumulate IPCA Laboratories ; target of Rs 2106: Dolat Capital

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.

Outlook

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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