Motilal Oswal's research report on Ipca Laboratories
We recently met the management of IPCA lab to understand its business outlook in detail: The domestic formulation (DF) segment continues on its robust growth path, led by market share gain, favorable price hikes, addition of medical representatives (MRs), and its increased presence particularly in the cardiology segment. The exports opportunity is expected to improve with increased product launches in the UK, new launches and market share gain in Russia, and industry outperformance in Africa branded generics market. After 18% YoY decline in earnings in FY22, we expect 11% earnings CAGR over FY22-24, led by 13%/8%/8% sales CAGR in DF, exports formulations, and API, respectively. We reduce the 12M forward PE multiple to 22x from 24x to factor in extended period to revive exports formulation and API business. Thereby, we arrive at a price target of INR1,030 on 12M forward basis.
Further, considering a 30% correction in market price over the past nine months and the stock now trading at 23x FY23E EPS of INR37 and 19x (vs 3-year average of 23x) FY24E EPS of INR45, we reiterate our Buy rating on the stock.
At 16:01 hrs Ipca Laboratories was quoting at Rs 895.00, up Rs 5.85, or 0.66 percent.
It has touched an intraday high of Rs 903.00 and an intraday low of Rs 883.65.
It was trading with volumes of 3,365 shares, compared to its thirty day average of 8,490 shares, a decrease of -60.36 percent.
In the previous trading session, the share closed down 0.04 percent or Rs 0.40 at Rs 889.15.
The share touched its 52-week high Rs 1,383.55 and 52-week low Rs 831.40 on 15 September, 2021 and 13 June, 2022, respectively.
Currently, it is trading 35.31 percent below its 52-week high and 7.65 percent above its 52-week low.Market capitalisation stands at Rs 22,706.53 crore.
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