ICICI Direct is bullish on Ipca Laboratories has recommended buy rating on the stock with a target price of Rs 1900 in its research report dated June 17, 2020.
ICICI Direct's research report on Ipca Laboratories
Q4FY20 revenues grew 22.1% YoY to Rs 1074 crore (I-direct estimate: Rs 1152 crore). Export formulations grew 11.4% YoY to Rs 282 crore (I-direct estimate: Rs 362 crore). Domestic revenues grew 21.2% YoY to Rs 431 crore (I-direct estimate: Rs 420 crore). API segment grew 30.0% YoY to Rs 275 crore. EBITDA margins declined 291 bps YoY to 15.7% (I-direct estimate: 21.9%) due to forex loss and higher personnel cost. EBITDA grew 3.0% YoY to Rs 168.5 crore (I-direct estimate: Rs 252 crore). Net profit de-grew 12.7% YoY to Rs 86 crore (I-direct estimate: Rs 177 crore). Delta vis-à-vis EBITDA was due to higher depreciation and lower other income.
Ipca has maintained growth tempo in FY20, as was the case for FY19. Besides strong domestic formulations franchise, it continues to thrive on exports front, both in formulations, APIs. Though there are fluctuations in the institutional business, the management remains upbeat on prospects. Going ahead, with firm growth tempo in domestic formulations and good prospects both for API exports and formulation exports, we expect further improvement in financial parameters. The company will continue to remain a compelling bet on the back of well-rounded growth prospects for FY20–22E- sales, EBITDA and PAT CAGR of 13%, 22% and 29%, respectively. We arrive at our target price of Rs 1900 (24x FY22E EPS of Rs 79.2).
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