Neutral Ipca Laboratories; target of Rs 840: Motilal Oswal

Motilal Oswal recommended Neutral rating on Ipca Laboratories with a target price of Rs 840 in its research report dated August 12, 2023.

Broker Research

August 23, 2023 / 15:10 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on Ipca Laboratories

IPCA delivered lower-than-expected 1QFY24 financial performance as growth moderated in the international generics, API and institutional antimalaria segments. Domestic formulation (DF) continued to perform well owing to healthy traction in key therapies like pain, cardiovascular, CNS and dermatology. We cut our FY24 earnings estimate by 4% factoring in near-term weakness in API business and a gradual recovery in anti-malaria segment. We value IPCA at 22x 12M forward earnings to arrive at a TP of INR840. IPCA remains well placed to sustain industry-beating growth in the DF segment. We await clarity on recent USFDA inspections at its formulation and API sites. Moreover, Unichem’s site was last inspected in CY20. Thus the USFDA regulatory risk remains high on IPCA/Unichem combined basis. We retain our Neutral rating on the stock as we believe the current valuation richly factors in earnings upside.

Outlook

We cut our FY24 earnings estimate by 4%, factoring in near-term weakness in API business, and a gradual recovery in anti-malaria segment. We value IPCA at 22x 12M forward earnings to arrive at a TP of INR840.

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