Checkout Budget Highlights 2023Motilal Oswal's research report on IPCA Laboratories
IPCA delivered a lower-than-expected performance in 3QFY23, with an 11%/ 20% miss on EBITDA/PAT. Sales, however, came in line with estimates. High opex and a slow pick-up in API sales hurt profitability. We cut our FY23/Fy24/FY25 EPS estimates by 20%/14%/14% to factor in 1) a moderation in generics exports, 2) a gradual pick-up in API off-take and subsequent lower operating leverage, 3) an adverse impact of lower pricing for products under NLEM in domestic formulation (DF), and 4) a higher tax outgo. We continue to value IPCA at 24x 12M forward earnings to arrive at a TP of INR990. IPCA continues to deliver industry-beating growth in the DF segment and expects to sustain the momentum via increased MR force and marketing activities. Exports (generics) are expected to pick up as new product registrations/launches are underway. Maintain BUY.
Outlook
We cut our FY23/FY24/FY25 EPS estimates by 20%/14%/14% to factor in 1) a moderation in generics exports, 2) a gradual pick-up in API off-take and subsequent lower operating leverage, and 3) a higher tax outgo. We continue to value IPCA at 24x 12M forward earnings to arrive at a TP of INR990.
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