Ipca Laboratories gains 3% on USFDA classification

Ipca Laboratories is engaged in the business of manufacturing pharmaceuticals. The company specialises in the production of generic APIs, formulations majorly for the therapeutic segment.

Ipca Laboratories stock jumped 3 percent on August 24 after the bulk drug and formulations maker maker announced it had received voluntary action indicated (VAI) classification from the United States Food and Drug Administration (USFDA) for its Piparia (Silvassa) manufacturing unit.

"This classification means that the facility was found to be adhering to a minimally acceptable state of compliance with regards to current good manufacturing practice," the company said.

According to USFDA, VAI means objectionable conditions or practices were found but the agency (here, USFDA) is not prepared to take or recommend any administrative or regulatory action. This is considered to be the second best classification after ‘no action indicated’ and before ‘official action indicated.’

At 10.45 am on the NSE, Ipca laboratories stock was quoting at Rs 905.95, up Rs 28.90, or 3.30 percent. The stock has been witnessing consolidation since August 1.

Financials

In its results for Q1FY24, the company reported a 0.12 percent year-on-year (YoY) rise in its revenue from operations at Rs 1,588 crore. Profit after taxes increased 13.10 percent YoY to Rs 164 crore. Meanwhile, the operating profit margins for the April-June quarter expanded by 200 basis points to 19 percent.

According to analysts, the company’s financials for the quarter were affected by softening demand in the international generics, active pharmaceutical ingredients (API), and institutional malaria segments.

Brokerage rating

Motilal Oswal Financial Services has a ‘neutral’ rating on the stock with a target price of Rs 840.

“We cut our FY24 earnings estimate by 4% factoring in near-term weakness in API business and a gradual recovery in the anti-malaria segment. We retain our ‘neutral’ rating on the stock as we believe the current valuation richly factors in earnings upside,” the financial services firm said.

Ipca Laboratories is engaged in the business of manufacturing pharmaceuticals. The company specialises in the production of generic APIs, formulations majorly for the therapeutic segment.

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