Buy Ipca Laboratories; target of Rs 900: ICICI Direct
ICICI Direct is bullish on Ipca Laboratories has recommended buy rating on the stock with a target price of Rs 900 in its research report dated February 13, 2019.
February 25, 2019 / 04:24 PM IST
ICICI Direct's research report on Ipca Laboratories
Q3FY19 results were a comprehensive beat vis-a-vis I-direct estimates on the profitability front due to strong EBITDA margins (24.5% vs. I-direct estimate of 17.7%). Revenues grew 10.3% YoY to Rs 947.6 crore (I-direct estimate: Rs 939.1 crore) due to 10% growth in domestic formulations to Rs 421.6 crore EBITDA margins improved 569 bps YoY to 24.5% (I-direct estimate: 17.7%) due forex gain, strong gross margins and lower employee cost. EBITDA grew 43.7% YoY to Rs 231.7 crore (I-direct estimate: Rs 166.3 crore) Net profit grew 51.7% to Rs 160.2 crore (I-direct estimate: Rs 107.2 crore) mainly due to a strong operational performance.
Overall, things are looking much stable over the course of the next two to three years both on the revenues and margins front. With growing influence of ex-US segments in earnings, the company will continue to remain a compelling bet at this level given the FY18–21E growth prospects - sales, EBITDA and PAT CAGR of 14%, 18% and 20%, respectively. We arrive at our target price of Rs 900 (17x FY21E EPS of Rs 53.0).
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