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Buy Ipca Laboratories; target of Rs 2680: Motilal Oswal

Motilal Oswal is bullish on Ipca Laboratories recommended buy rating on the stock with a target price of Rs 2680 in its research report dated November 09, 2020.

November 13, 2020 / 03:09 PM IST
 
 
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Motilal Oswal 's research report on Ipca Laboratories


Ipca Laboratories (IPCA) delivered a better-than-expected quarter, led by a superior product mix and lower opex. A growing connect between patient, doctor, and marketing representative (MR) with the easing of the lockdown presents a better outlook in Domestic Formulation (DF) segment. Favorable demand for APIs and healthy traction in the EU/Institutional segment is further strengthening the earnings growth momentum for IPCA. We raise our EPS estimate by 5%/7% for FY21/FY22, factoring in a) an extended cost savings benefit in DF, b) improving demand in the Cough-Cold and Dermatology therapies, c) revival in the UK business, and d) debottlenecking in the API segment. We also introduce FY23 estimates. We value IPCA at 25x 12M forward earnings to arrive at Target Price of INR2,680. We remain positive on IPCA on the back of steady outperformance in the DF segment, cost efficiency in API, and launches under its own label in the UK segment. Reiterate Buy.



Outlook


We value IPCA on a 25x 12M forward earnings basis to arrive at Target Price of INR2,680. We remain positive on IPCA on the back of: a) traction in new APIs as well as continued momentum in existing API molecules - supported by opportunities arising from geopolitical tensions, b) a superior performance in DF, c) products launches under its own label in the UK, and d) increased backward integration. Reiterate Buy.


For all recommendations report, click here


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first published: Nov 13, 2020 03:09 pm

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