Buy Ipca Laboratories; target of Rs 2365: Sharekhan

Sharekhan's research repor on Ipca Laboratories

IPCA Laboratories Limited (IPCA) reported an impressive performance for Q1FY2021. Revenues at Rs 1534 cr grew 43.2% YoY, OPM expanded remarkably by 1983 BPS YoY to 38.3%. PAT at Rs 445 cr was up 243% yoy. IPCA sees double digit growth trajectory to sustain for both API and Formulations segment. It has marginally revised its revenue growth guidance upwards to 18-19% as compared to 14-17% earlier. Resolution of USFDA issues at the Pithampur and Pipariya plant is critical and upon successful resolution can lead to earnings upgrades. Strong earnings prospects amidst uncertain times, a sturdy balance sheet and healthy return ratios augur well for IPCA.

Outlook

We retain our Buy recommendation on the stock with revised PT of Rs 2365.

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