Buy Ipca Laboratories; target of Rs 715: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Ipca Laboratories

Exports formulations (31% of FY17 turnover) have grown at 6.3% CAGR in FY11-17. Growth in exports formulations was on the back of growth in both international generics and international branded formulations. The international anti-malarial institutional business has also contributed substantially to overall exports growth. US traction will take more time than earlier estimated due to USFDA import alerts for the Ratlam facility which is the only API source for Silvassa and Pithampur (Indore) formulations plants, along with Silvassa and Pithampur (Indore) plants that are specifically earmarked for US business, besides third party sales, thus affecting US visibility.

Outlook

On the USFDA re-inspection front, the company has completed remedial at three locations and has invited USFDA officials for re-inspection. However, the resolution seems months away. With growing influence of ex-US segments in the earnings, the company once again becomes a compelling bet at this level given the FY17– 20E growth prospects- Sales, EBITDA and PAT CAGR of 10%,22% and 43% respectively. Our new target price is Rs 715 (16x FY20E EPS of Rs 44.7).

For all recommendations report, click here

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