Prabhudas Lilladher's research report on Indoco Remedies
We cut our FY24/FY25 EPS by ~17%/6% to factor in low margins. Indoco Remedies’ (INDR) Q2FY24 revenues at Rs4.8bn were largely in-line, while EBITDA was 4% below our estimates led by higher remediation cost. Adjusted for one offs, margins came in at ~17%. The recent OAI to its Goa unit-2 is negative and will restrict growth in US sales in FY24. However, we remain structurally positive on INDR’s growth prospects given steady domestic franchise (50% of total sales) and reasonable valuations.
Outlook
We expect 17% PAT CAGR over FY23-25E. At CMP, stock is trading at 17.5x FY25E EPS. We retain our ‘Buy’ rating with revised TP of Rs385 valuing at 18x Sept 2025E EPS, as we roll forward. Timely resolution of Goa facility unit-2 is a key for re-rating.
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