Buy Ipca Labs; target of Rs 1200 : Motilal Oswal

Motilal Oswal's research report on Ipca Labs

We believe IPCA can deliver mid-teens earnings CAGR over the next two years (v/s YoY earnings decline in FY22), fueled by branded generics in the domestic formulation (DF)/exports segments and capacity addition in API. Technically superior molecules backed by enhanced marketing efforts stand IPCA in good stead in the DF segment. However, the company faces headwinds in its CIS business (3.5% of sales for 9MFY22) along with slower off-take in the API/UK businesses.

Outlook

Accordingly, we have cut our FY23E/FY24E earnings by 8%/6%, respectively, and value IPCA at 24x 12M forward earnings to arrive at our TP of INR1,200. We believe its current valuation adequately factors in the downside in earnings; maintain BUY. Our TP implies 18% potential upside from the current level.

More Info

At 13:50 hrs Ipca Laboratories was quoting at Rs 1,023.00, up Rs 3.75, or 0.37 percent.

It has touched an intraday high of Rs 1,036.60 and an intraday low of Rs 997.00.

It was trading with volumes of 11,254 shares, compared to its thirty day average of 22,584 shares, a decrease of -50.17 percent.

In the previous trading session, the share closed up 1.83 percent or Rs 18.30 at Rs 1,019.25.

The share touched its 52-week high Rs 1,383.55 and 52-week low Rs 899.50 on 15 September, 2021 and 19 March, 2021, respectively.

Currently, it is trading 26.06 percent below its 52-week high and 13.73 percent above its 52-week low.

Market capitalisation stands at Rs 25,953.94 crore.

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