Hold Ipca Laboratories; target of Rs 880: Prabhudas Lilladher

Prabhudas Lilladher's research report on Ipca Laboratories

Ipca Labs (IPCA) Q1 EBITDA of Rs2.95bn was broadly in line with our estimate. Domestic formulation business continues to outperform and grow at healthy levels however export business (50% of total sales) outlook remains muted and will drag profitability. We reduce our FY24/FY25E EPS estimates by 12%/6% to factor in lower revenue growth from export business. The Unichem acquisition will allow IPCA to re-enter US formulation generic market, however it may be margin and return ratios dilutive in near term.

Outlook

At CMP, the stock is trading at 26x FY25E factoring in near term recovery. Maintain our ‘Hold’ rating with revised TP of Rs880/share (Rs750 earlier), valuing at 25x (20x earlier) FY25E EPS.

For all recommendations report, click here