Prabhudas Lilladher's research report on Indoco Remedies
We cut our FY24/FY25 EPS by ~11%/6% to factor in low margins and US sales. Indoco Remedies’ (INDR) Q1FY24 revenues at Rs4.2bn were largely in-line, while EBITDA was 20% below our estimates led by Rs80mn one offs and higher other expenses. Adjusted for one offs, margins came in at 16.2%. The recent OAI to its Goa unit-2 is negative and will restrict growth in US sales in FY24. However, we remain structurally positive on INDR’s growth prospects given steady domestic franchise (50% of total sales) and reasonable valuations. We expect 17% PAT CAGR over FY23-25E. At CMP, stock is trading at 15x FY25E EPS.
Outlook
We retain our ‘Buy’ rating with revised TP of Rs380 valuing at 18x FY25E EPS. Timely resolution of Goa facility unit-2 is a key for re-rating.
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