Hold Ipca Laboratories; target of Rs 909: Sharekhan

Sharekhan's research report on Ipca Laboratories

Q3 results were subdued with a sharp miss of ~42% on the consolidated adjusted profit front at Rs. 107.8 crore (down 45.2% y-o-y) due to lower-than-expected margins and sharp rise in finance costs. For Q4FY2023, management expects revenue growth to be at 10-12%. However, margins will be lower due to NLEM price reduction. Margin pressure will continue, and we expect gradual recovery; earnings growth estimate is down to 3% CAGR over FY2022-FY2025E.

Outlook

We maintain our Hold rating on Ipca Labs with a revised PT of Rs. 909, noting rich valuation levels of 27.1x/21.0x it is trading at on revised FY2024E/FY2025E EPS.