Buy Ipca Laboratories; target Rs 706: Firstcall Research

Firstcall's research report on Ipca Laboratories

"For Q1 FY14, Ipca Laboratories posted a 26.98 percent qoq growth in net sales to Rs. 8055.60 millions. Export Income increased a growth of 35 percent to Rs. 4965.40 millions in Q1 FY14 as against Rs. 3667.30 millions in Q1 FY13. During the quarter, net profit jumps to Rs. 717.70 million against Rs. 429.80 million in the corresponding quarter ending of previous year, an increase of 66.98 percent. During the quarter, total expenditure rose by 28 per cent mainly on account of increase in material consumed cost by 9 percent along with depreciation. For Q1 FY14, domestic branded formulations revenue jumps to Rs. 2503.60 million as against Rs. 2241.80 million in the corresponding quarter ending of previous year, an increase of 12 percent. And revenue from export of formulations at Rs. 3299.50 million in Q1 FY14 as against Rs. 2245.10 million in Q1 FY13, growth of 47 percent."

"The products of the Company are now exported to over 110 countries across the globe. During the financial year 2012-13, the international business increased by 22 percent to Rs. 17160.80 million as against Rs. 14019.70 million in the previous year. Formulation exports of the Company increased by 20 percent to Rs. 11941.80 million and exports of APIs and Drug Intermediates increased by 29 percent to Rs. 5219.00 million. Indian pharma companies are focusing on global generic and API business, R & D activities and contract research and manufacturing alliances. India is also fast emerging as a preferred pharmaceuticals manufacturing location. The Company further expanded its therapeutic coverage with introduction of new formulations, both in the domestic and export markets, especially in the fast growing life style related segments. Over FY2012-15E, we expect the company to post a CAGR of 16 percent and 14 percent in its top-line and bottom-line respectively. Hence, we recommend 'BUY' for 'IPCA LABORATORIES LTD' with a target price of Rs 706 on the stock," says Firstcall Research report.

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