Accumulate Ipca Labs; target of Rs 882: Angel Broking

Angel Broking's report on Ipca Laboratories"For 4QFY2014, Ipca Laboratories (Ipca Labs) posted results above our expectations on the net profit front, but posted sales lower than expected. Sales for the quarter came in at Rs 740cr (V/s an expected Rs 824cr), up 12.3% yoy. The OPM came in at 23.3% (V/s an expected 23.7%), expanding by 370bp yoy. This, coupled with a growth in the top-line, aided the adjusted net profit to come in at Rs 123cr, a yoy growth of 63.3%."

"The company posted sales of Rs 740cr (V/s an expected Rs 854cr) for 4QFY2014, up 12.3% yoy. The growth was driven by formulations, which grew by 16% yoy, while the API grew by only 2% yoy. Domestic sales grew by 7.9% yoy, while exports grew by 14.5% yoy. The OPM came in at 23.3% (V/s an expected 23.7%), expanding by 370bp yoy. This, coupled with a growth in the top-line, aided the adjusted net profit to come in at Rs 123cr, a yoy growth of 63.3%."

"We expect net sales to post a 19.4% CAGR to Rs 4,563cr and EPS to register a 22.4% CAGR to Rs 58.8 over FY2014–16, driven by the US and domestic markets.At the current levels, the stock is trading at 15.9x and 13.4x FY2015E and FY2016E earnings, respectively. We recommend an Accumulate on the stock with a price target of Rs 882", says Angel Broking research report.

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