Motilal Oswal's research report on IPCA Laboratories
We met with the management of IPCA recently to understand its business outlook. Domestic formulation (DF) is the key driver of its sales growth, fueled by market outperformance in pain/dermatology/urology and supported by higher MR base. Notwithstanding the near-term hiccups in API segment, IPCA is building levers to almost double its API exports by FY27E. The exports (branded/generics) formulation sales is likely to revive from FY24. We have reduced our earnings estimate for FY23/FY24 by 4%/3% to factor in increased opex on the back of promotional activities and logistics cost. After two years of earnings decline, we expect IPCA to clock 33% earnings CAGR over FY23-25.
Outlook
We continue to value the stock at 24x 12-month forward earnings to arrive at our TP of INR1,000. Maintain BUY.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.