Reduce Ipca Labs, target price Rs 1,250: Prabhudas Lilladher

Prabhudas Lilladher has reduce call on Ipca Laboratories Ltd. with a target price of Rs 1,250. The current market price of Ipca Laboratories Ltd. is Rs 1,330.8.

Ipca Laboratories Ltd., incorporated in the year 1949, is a Mid Cap company (having a market cap of Rs 33944.36 Crore) operating in Pharmaceuticals sector.

Ipca Laboratories Ltd. key Products/Revenue Segments include Pharmaceuticals, Export Incentives, Scrap, Other Operating Revenue, Sale of services for the year ending 31-Mar-2024.


Investment Rationale
Ipca Labs (IPCA) Q1 EBITDA of Rs 3.9 bn was in line with our estimate. Management guidance of 9% revenue growth (excluding Unichem) was below our estimate while increase margin guidance by 50-110 bps.

Our FY25E and FY26E EPS broadly stand unchanged. Domestic formulation business continues to outperform and grow at healthy levels. However, recovery in API segment along with resumption of US sales is likely to be gradual.

At CMP, the stock is trading at 32.2x PE and 16.2x EV/EBTIDA on FY26E. We maintain our ‘Reduce’ with revised TP of Rs1,250/share, valuing at 30x FY26E P/E.

Financials
For the quarter ended 30-06-2024, the company has reported a Consolidated Total Income of Rs 2113.24 Crore, up 2.99 % from last quarter Total Income of Rs 2051.93 Crore and up 29.45 % from last year same quarter Total Income of Rs 1632.43 Crore. Company has reported net profit after tax of Rs 198.98 Crore in latest quarter.

Promoter/FII Holdings
Promoters held 46.3 per cent stake in the company as of 30-Jun-2024, while FIIs owned 10.85 per cent, DIIs 33.45 per cent.