CLSA downgrades IPCA Labs to 'sell'

MUMBAI: Brokerage CLSA has downgraded shares of IPCA Laboratories to 'sell' from 'buy' and cut target price to Rs 410 from Rs 650 as almost all drugs manufactured by the company at three of its facilities have been banned by the US Food and Drug Administration from the US market.

"Given the weak 4QFY17 results and withdrawal of exempted products, we have cut FY18-19CL EPS ( earnings per share) by 27-31 per cent," the brokerage said in a note.

The setback in the US along with a weak pound is likely to impact export growth and delay expansion of margins.

"Denial of exempted products in the US along with a weak GBP will likely lead to slow growth in generic exports. While branded generic sales are doing well, IPCA's margin expansion story will be delayed until sales to the US/UK pick-up."

Shares of the pharmaceutical company were down 0.24 per cent at Rs 470.55 in morning trade today.