Neutral Ipca Laboratories; target of Rs 1080: Motilal Oswal

Motilal Oswal recommended Neutral rating on Ipca Laboratories with a target price of Rs 1080 in its research report dated January 15, 2024.

Broker Research

February 19, 2024 / 11:58 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on Ipca Laboratories

IPCA delivered operationally in-line 3QFY24 performance. It continues to deliver robust YoY growth in the domestic formulation (DF) segment. However, this is offset by deceleration in exports/API business. We cut our earnings estimate by 9%/4%/4% for FY24/FY25FY26 to factor in a) prolonged subdued outlook in the API segment, b) lower off-take in branded generics segment, and c) reduced operating leverage. We value IPCA at 23x 12M forward earnings to arrive at a price target of INR1,080. IPCA remains on track to deliver better-than-industry growth in the domestic formulation segment. Its efforts are underway to rebuild US business from its site, given successful compliance in place. However, the branded generics segment would need enhanced efforts to improve growth prospects. We estimate 17%/27%/45% sales/EBITDA/PAT growth over FY24- 26. The current valuation adequately factors in the upside in earnings. We reiterate our Neutral stance on the stock.

Outlook

We cut our earnings estimate by 9%/4%/4% for FY24/FY25FY26 to factor in a) prolonged subdued outlook in the API segment, b) lower off-take in branded generics segment and c) reduced operating leverage. We value IPCA at 23x 12M forward earnings to arrive at a price target of INR1,080.

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