Accumulate Ipca Laboratories; target of Rs 865: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Ipca Laboratories

Ipca Labs (IPCA) Q3 OPM of 15% was lowest since FY19, impacted by lower GMs and continued higher overheads. We expect margins to recover from Q1FY24 as revenues scale-up with NLEM benefits, along with easing of certain raw material prices. Domestic business (45% of total sales), remained strong and will continue to outperform IPM. Further, export business is on a gradual recovery mode with UK and export API business expected to normalize. At CMP, the stock is trading at 23x FY25E factoring in near term recovery. Downgrade to ‘Hold’.

Outlook

We reduce our FY24/FY25E EPS estimates by 21%/15% and downgrade the stock to ‘Hold’ from Accumulate with revised TP of Rs865 (Rs950 earlier), valuing at 23x on FY25E EPS. Our FY24/FY25E factors margin recovery to 19%/ 21%.

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IPCA Laboratories - 17 -02 - 2023 - prabhu