IPCA held its strong guidance for FY21E with 1) Revenue growth of 14-17% 2) EBITDA margin expansion of 100-150bps and 3) domestic formulation growth of 10-12% in tough environment. We believe IPCA’s Q4FY20 performance and growth visibility was far better as compared to its peers. Also, future prospects are not depended on exogenous factors (like resolution from FDA, new approval and tender win).
OutlookWe believe FDA’s resolution in FY21E for its three plants would lead to an earnings surprise. Accordingly, we value IPCA at Rs1,839(earlier Rs1,728) on 26x PE of FY22E and upgrade to Buy (earlier Accumulate) due to marginal change in earnings estimate.
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