9 November 2020
2QFY21 Results Update | Sector: Healthcare
Ipca Laboratories
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
IPCA IN
126
287.2 / 4
2456 / 1053
2/11/106
650
Financials & Valuations (INR b)
Y/E MARCH
2020 2021E 2022E
46.5 56.6 62.6
Sales
9.6 16.1 16.3
EBITDA
6.5 11.8 12.0
Adj. PAT
EBIT Margin (%)
16.1 24.7 22.2
51.4 93.7 94.9
Cons. Adj. EPS (INR)
41.6 82.4
1.3
EPS Gr. (%)
286.5 366.8 447.5
BV/Sh. (INR)
Ratios
Net D:E
0.1
0.0 -0.1
19.2 28.7 23.3
RoE (%)
17.7 26.2 21.8
RoCE (%)
Payout (%)
14.8 14.9 15.0
Valuations
44.3 24.3 24.0
P/E (x)
30.3 17.7 17.2
EV/EBITDA (x)
Div. Yield (%)
0.3
0.6
0.6
FCF Yield (%)
0.6
2.3
2.4
6.2
5.0
4.5
EV/Sales (x)
CMP: INR2,265
TP: INR2,680 (+18%)
Product mix, reduced operating cost drive earnings
Multiple factors in place to sustain growth momentum
Buy
Ipca Laboratories (IPCA) delivered a better-than-expected quarter, led by a
superior product mix and lower opex. A growing connect between patient,
doctor, and marketing representative (MR) with the easing of the lockdown
presents a better outlook in Domestic Formulation (DF) segment. Favorable
demand for APIs and healthy traction in the EU/Institutional segment is
further strengthening the earnings growth momentum for IPCA.
We raise our EPS estimate by 5%/7% for FY21/FY22, factoring in a) an
extended cost savings benefit in DF, b) improving demand in the Cough-Cold
and Dermatology therapies, c) revival in the UK business, and d)
debottlenecking in the API segment. We also introduce FY23 estimates. We
value IPCA at 25x 12M forward earnings to arrive at Target Price of
INR2,680. We remain positive on IPCA on the back of steady
outperformance in the DF segment, cost efficiency in API, and launches
under its own label in the UK segment. Reiterate Buy.
IPCA’s 2QFY21 sales were up 6% YoY to INR13.6b (in-line), led by growth in
API and Exports Formulation – Institutional (EFI) / Generics (EFG).
API sales grew 21% YoY to INR3.8b (28% of sales). EFI/EFG grew 7%/33% YoY
to INR1.9b/INR819m (14%/6% of sales).
DF sales were steady YoY at INR5.4b (39% of sales). Branded Exports
Formulation sales declined 9% YoY to INR914m (7% of sales). Other
operating income and revenue from subsidiaries declined 6% YoY to
INR802m.
The gross margin was up 250bp YoY to 67.5% on a product mix change.
The EBITDA margin expanded ~580bp YoY (to 26.5%) owing to a better gross
margin and strong operating leverage (other expenses down 390bp YoY).
EBITDA grew 35.5% YoY to INR3.6b (est. INR3.3b).
Ipca had one-time forex gains of INR171m in 2QFY21.
Adjusting for the same, PAT grew 31% YoY to INR2.5b (est. INR2.4b).
For 1HFY21, revenue / EBITDA / adj. PAT grew 22.6%/104.2%/121.6% YoY to
INR29b/INR9.5b/INR7b.
IPCA guided for 10–12% YoY growth in overall sales for 2HFY21. Particularly,
DF / API / Branded Exports Formulation sales would grow 10%/18–20%/10–
11% YoY in 2HFY21.
Ipca would incur capex worth INR2b for FY21 and INR3–3.5b for FY22.
EBITDA margins are expected to be 25–27% for FY22.
Lower crude oil prices would keep raw material prices in check.
Export incentive benefits of INR120–130m are not included in this quarter
due to uncertainty over the scheme.
Controlled costs lead to strong YoY earnings growth
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Sep-20
46.1
28.9
12.4
12.6
Jun-20
46.1
28.2
12.4
13.3
Sep-19
46.1
24.1
16.1
13.7
FII Includes depository receipts
Highlights from management commentary
Research Analyst: Tushar Manudhane
(Tushar.Manudhane@motilaloswal.com)
Bharat Hegde, CFA
(Bharat.Hegde@motilaloswal.com)
/ Hitakshi Chandrani
(Hitakshi.Chandrani@MotilalOswal.com);
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Ipca Laboratories
Valuation and view
We raise our earnings estimate by 5%/7% for FY21/FY22, factoring in a) lower
opex and a better growth outlook in DF, b) increased prospects in the UK
business, c) increased business opportunity in the Institutional segment, and d)
a capacity enhancement exercise in the API segment.
We expect an earnings CAGR of 29% (FY20–23), supported by a sales CAGR of
12%/19%/29%/17% in the DF/API/Institutional/Generics segment and 610bp
margin expansion owing to a better product mix and operating leverage.
We value IPCA on a 25x 12M forward earnings basis to arrive at Target Price of
INR2,680.
We remain positive on IPCA on the back of: a) traction in new APIs as well as
continued momentum in existing API molecules – supported by opportunities
arising from geopolitical tensions, b) a superior performance in DF, c) products
launches under its own label in the UK, and d) increased backward integration.
Reiterate
Buy.
FY20
2Q
12,839
26.9
2,659
29.8
496
2,162
35.6
42
148
2,268
0
2,268
319
14.1
1,949
-18
1,931
37.2
15.0
FY21E
FY20 FY21E
2Q
3QE
4QE
13,611 13,839 13,797 46,487 56,592
6.0
14.1
28.5
23.2
21.7
3,602 3,474 3,170 9,580 16,129
35.5
26.9
44.3
33.6
68.4
521
530
570 2,105 2,132
3,081 2,944 2,600 7,475 13,997
42.5
32.1
66.9
39.8
87.3
23
28
50
165
128
-16
120
155
578
380
3,041 3,036 2,705 7,888 14,249
-171
0
0
445
-171
3,212 3,036 2,705 7,442 14,420
526
495
403 1,353 2,422
17.3
16.3
14.9
17.2
17.0
2,686 2,541 2,303 6,090 11,997
-16
-20
-28
-78
-70
2,528 2,521 2,275 6,485 11,784
30.9
27.6
68.3
41.6
82.4
18.6
18.2
16.5
14.0
20.8
(INR m)
Est. % Chg
2QE
13,644
-0.2
6.3
3,343
7.8
25.7
500
2,843
8.4
31.5
34
125
2,934
0
2,934
528
18.0
2,406
11.7
0
2,406
5.1
24.6
17.6
Quarterly Performance
Y/E March
Net Revenues (Core)
YoY Change (%)
EBITDA
YoY Change (%)
Depreciation
EBIT
YoY Change (%)
Interest
Other Income
PBT before EO Expense
One-off (gain)/ Expense
PBT after EO Expense
Tax
Rate (%)
Reported PAT
Minority Interest
Adj PAT after Minority Int
YoY Change (%)
Margins (%)
1Q
10,782
23.2
1,987
40.4
461
1,526
60.7
46
112
1,592
-91
1,683
374
23.5
1,310
-16
1,223
44.2
11.3
3Q
4Q
1Q
12,129 10,738 15,344
20.5
22.1
42.3
2,737 2,197 5,883
32.8
33.5 196.1
508
639
510
2,228 1,558 5,373
39.0
30.0 252.0
40
37
27
181
137
121
2,369 1,658 5,466
0
536
0
2,369 1,123 5,466
369
292
999
15.6
17.6
18.3
2,001
830 4,468
-25
-23
-7
1,975 1,352 4,461
47.2
37.6 264.7
16.3
12.6
29.1
Key performance Indicators (Consolidated)
Y/E March
INRm
1Q
Domestic Formulation
4,528
YoY Change (%)
12.9
Exports Formulation
2,448
YoY Change (%)
9.3
API sales
2,983
YoY Change (%)
37.0
Cost Break-up
RM Cost (% of Sales)
37.7
Staff Cost (% of Sales)
20.0
Other Cost (% of Sales)
23.9
Gross Margins(%)
62.3
EBITDA Margins(%)
18.4
EBIT Margins(%)
14.2
FY20
2Q
5,432
15.9
3,408
18.2
3,144
39.6
35.0
18.1
26.2
65.0
20.7
16.8
3Q
4,856
16.0
3,534
25.2
2,854
24.0
34.9
19.1
23.4
65.1
22.6
18.4
4Q
4,310
21.2
2,825
11.4
2,751
30.0
34.0
22.6
23.0
66.0
20.5
14.5
1Q
4,894
8.1
4,636
89.4
5,133
72.1
28.1
16.7
16.8
71.9
38.3
35.0
FY21E
2Q
3QE
5,355 5,342
(1.4)
10.0
3,644 4,095
6.9
15.9
3,810 3,567
21.2
25.0
32.5
18.7
22.3
67.5
26.5
22.6
33.0
18.9
23.0
67.0
25.1
21.3
FY20
4QE
5,257
22.0
4,162
47.4
3,943
43.3
34.4
19.9
22.8
65.6
23.0
18.8
19,126
16.1
12,216
16.5
11,731
32.6
35.4
19.8
24.2
64.6
20.6
16.1
FY21E
20,847
9.0
16,538
35.4
16,453
40.2
28.1
16.7
16.8
71.9
28.5
24.7
Est.
2QE
5,921
9.0
3,573
4.8
3,930
18.0
34.5
19.0
22.0
65.5
24.5
20.8
9 November 2020
2
 Motilal Oswal Financial Services
Ipca Laboratories
Highlights from management commentary
In DF, the Pain therapy (>50% of DF) grew 10% YoY in 2QFY21. The Cardiac
segment grew 6% YoY during the quarter.
Cough-Cold, Anti-Bacterial, and Anti-Malarial continue to witness YoY decline,
but at a slower rate v/s 1QFY21.
The UK business suffered due to issues with distributors. With issues resolved,
the outlook is expected to improve in the coming quarters.
Ipca has launched a project at the Aurangabad plant to manufacture
intermediates for Sartans. The equipment installation is expected to be
complete by Dec’20.
International freight cost remains at elevated levels.
Capex of ~INR1b is being undertaken at Ratlam for debottlenecking, and the
process would commence by Mar’21. This is expected to expand the facility by
10–15% in the API segment.
After environmental clearance, civil work has begun at the Dewas site. IPCA has
guided for completing the construction within 15M.
Prospects remain positive across key segments
DF: Key therapies (Pain/Cardiac) progressing well; growth in other
therapies also picking up gradually
IPCA reported 3% YoY growth in DF sales (adj. for HCQS sales in 1Q) in 1HFY21.
While 1Q HCQS sales were a one-off, no one-off revenues were reported in 2Q.
The demand scenario is turning favorable with the resumption of clinics by
doctors and a willingness among patients to reach out to their doctors. The
digital mode of communication has significantly enhanced the marketing efforts
of MRs.
Structural cost savings are expected to keep profitability at elevated levels.
Considering one-time HCQS sales and a dent in certain therapies on account of
COVID, we expect IPCA to garner a 12% sales CAGR to INR27b in DF over FY20–
23.
The API business (28% of sale) posted growth of 46% YoY in 1HFY21, led by
robust demand and partly by the COVID-led off-take of HCQS. HCQS demand
had already normalized in 2Q. It has a strong API product portfolio focused on
CVS, Anti-Malarial, and Pain, with products in these segments accounting for
>75% of sales.
IPCA is not only expanding API capacity (at Dewas) but also working on
backward integration as well as debottlenecking (at Ratlam). This would enable
sales growth as well as profitability. It is also working on the continuous
production (v/s traditional batch production) process for some intermediates.
This, if successful, would enhance process efficiency and profitability, and
reduce dependency on China in the API segment.
Overall, we expect IPCA to deliver a 19% sales CAGR to INR20b in the API
segment over FY20–23.
The Institutional business posted phenomenal growth of 92% YoY in 1HFY21.
API: WIP to enhance capacity
Institutional exports – healthy order book provides good business visibility
17 June 2020
3
 Motilal Oswal Financial Services
Ipca Laboratories
While one of the company’s major customers (contributing 35–40% to the
Institutional Anti-Malarial business) reduced intake in FY20, the order book still
looks robust for FY21. It is also increasing product offerings and has registered
for one injectable dosage. Accordingly, we expect a sales CAGR of 29% to
INR3.8b over FY20–23.
We raise our earnings estimate by 5%/7% for FY21/FY22, factoring in a) lower
opex and a better growth outlook in DF, b) increased prospects in the UK
business, c) increased business opportunity in the Institutional segment, and d)
a capacity enhancement exercise in the API segment.
We expect an earnings CAGR of 29% (FY20–23), supported by a sales CAGR of
12%/19%/29%/17% in DF/API/Institutional/Generics segment and 610bp margin
expansion on a better product mix and operating leverage.
We value IPCA on a 25x 12M forward earnings basis to arrive at Target Price of
INR2,680.
We remain positive on IPCA on the back of a) traction in new APIs as well as
continued momentum in existing API molecules, b) a superior performance in
DF, c) product launches under its own label in the UK, and d) increased
backward integration. Reiterate
Buy.
Exhibit 2: P/B chart
Multiple levers in place to deliver 29% earnings CAGR over FY20–23
Exhibit 1: P/E chart
P/E (x)
Min (x)
80.0
60.0
40.0
20.0
0.0
Avg (x)
+1SD
Max (x)
-1SD
6.0
4.0
P/B (x)
Min (x)
Avg (x)
+1SD
5.7
4.1
2.5
Max (x)
-1SD
61.7
40.4
25.6
10.8
10.5
3.3
5.7
26.0
2.0
0.0
1.8
Source: MOFSL, Company, Bloomberg
Source: MOFSL, Company, Bloomberg
9 November 2020
4
 Motilal Oswal Financial Services
Ipca Laboratories
Story in charts
Exhibit 3: Total sales up 6% YoY in 2QFY21
Sales (INR b)
YoY Growth (%)
42
16
-1
18
23
17
17
12
23
27
21
22
6
5.0
Exhibit 4: DF sales steady on YoY basis
Domestic formulations (INR b)
35.9
14.2 16.7
15.9 16.0
10.3 10.1 10.2 12.9
YoY Growth (%)
21.2
8.1
-1.4
8.6 8.6 7.8 8.8 10.1 10.1 8.8 10.8 12.8 12.1 10.7 15.3 13.6
4.2 3.8 3.2 4.0 4.7 4.2 3.6 4.5 5.4 4.9 4.3 4.9 5.4
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 5: Exports Formulation up 7% YoY
Export formulations (INR b)
YoY Growth (%)
89.4
Exhibit 6: APIs up 21% YoY
APIs (INR b)
YoY Growth (%)
72.1
24.8 27.0
37.0 39.6
16.2 20.1 10.2
24.0 30.0
21.2
16.8 12.3
23.2
-5.0
-11.3
3.5 1.0 9.3
18.2 25.2
11.4
6.9
5.0
18.1
2.3 2.7 2.5 2.2 2.9 2.8 2.5 2.4 3.4 3.5 2.8 4.6 3.6
1.9 1.9 1.9 2.2 2.3 2.3 2.1 3.0 3.1 2.9 2.8 5.1 3.8
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 7: EBITDA margin up 580bp YoY to 26.5%
EBITDA (INR b)
EBITDA Margin (%)
38.3
17.8 19.9 15.0 16.2 20.2 20.5 18.7
18.4
20.7 22.6
20.5
Exhibit 8: Expect sales CAGR of 16% over FY20–22
Formulation (INR b)
API (INR b)
26.5
19.4
21.0
23.2
1.5 1.7 1.2 1.4 2.0 2.1 1.6 2.0 2.7 2.7 2.2 5.9 3.6
7.7
22.9
FY15
7.3
20.4
FY16
7.9
22.9
FY17
8.7
23.0
FY18
11.1
24.7
FY19
14.2
29.0
34.4
38.7
43.9
FY20 FY21E FY22E FY23E
Source: Company, MOFSL
Source: Company, MOFSL
9 November 2020
5
 Motilal Oswal Financial Services
Ipca Laboratories
Exhibit 9: Expect DF CAGR of 12% over FY20–23
DF Revenues (INR b)
16.4
15.3
15.5
16.1
14.0
9.0
2.7
11.3
FY15
12.0
FY16
13.9
FY17
14.3
FY18
16.5
FY19
19.1
20.8
23.8
27.1
14.0
Growth (%)
Exhibit 10: Margins to expand 610bp over FY20–23E
EBITDA (INR b)
EBITDA Margin (%)
28.5
19.0
11.8
13.9
13.8
16.1
5.3
FY15
3.4
FY16
4.4
FY17
4.5
FY18
7.2
FY19
9.6
20.6
26.0
26.7
16.8
6.7
16.3
18.7
FY20 FY21E FY22E FY23E
Source: Company, MOFSL
FY20 FY21E FY22E FY23E
Source: Company, MOFSL
Exhibit 11: Return ratios taper over FY21–23
RoCE (%)
RoE (%)
26.2
17.7
19.2
8.6
9.3
FY18
FY19
FY20 FY21E FY22E FY23E
Source: Company, MOFSL
15.8
28.7
23.3
21.8
21.3
Exhibit 12: Expect EPS CAGR of 29% over FY20–23
Core EPS (INR/ share)
10.1
5.5
12.0
5.9
FY15
FY16
8.6
FY17
7.5
14.3
22.5
19.8
10.5
16.1
19.0
36.3
51.4
93.7
94.9 111.2
FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
Source: Company, MOFSL
9 November 2020
6
 Motilal Oswal Financial Services
Ipca Laboratories
Financials and valuations
Income Statement
Y/E March
Net Revenues
Change (%)
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income - Rec.
PBT before EO Expense
EO Expense/(Income)
PBT after EO Expense
Current Tax
Deferred Tax
Tax
Tax Rate (%)
Reported PAT
Less: Minority Interest
Net Profit
Adj PAT
Adj PAT growth (%)
Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Deferred liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Investments
Curr. Assets
Inventory
Account Receivables
Cash and Bank Balance
Loans & Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
FY14
32,818
16.7
8,106
24.7
1,031
7,074
269
-500
6,306
0
6,306
1,357
167
1,524
24.2
4,782
49
4,733
4,733
46.3
FY15
31,418
-4.3
5,291
16.8
1,796
3,495
284
358
3,569
-42
3,611
747
272
1,019
28.6
2,592
49
2,542
2,501
-47.2
FY16
28,850
-8.2
3,417
11.8
1,722
1,695
316
169
1,548
395
1,153
228
-42
186
12.0
967
35
933
1,328
-46.9
FY17
32,106
11.3
4,448
13.9
1,730
2,718
241
226
2,703
0
2,703
533
142
675
25.0
2,028
0
2,028
2,028
52.8
FY18
32,836
2.3
4,547
13.8
1,777
2,770
240
418
2,948
0
2,948
614
-102
511
17.3
2,436
42
2,394
2,394
18.1
FY19
37,732
14.9
7,170
19.0
1,824
5,346
189
483
5,640
157
5,483
1,218
-176
1,042
18.5
4,441
18
4,423
4,580
91.3
FY20
46,487
23.2
9,580
20.6
2,105
7,475
165
578
7,888
445
7,442
1,406
-53
1,353
17.2
6,090
78
6,012
6,485
41.6
FY21E
56,592
21.7
16,129
28.5
2,132
13,997
128
380
14,249
-171
14,420
2,137
285
2,422
17.0
11,997
0
11,997
11,826
82.4
FY22E
62,642
10.7
16,287
26.0
2,355
13,932
122
450
14,259
0
14,259
1,996
285
2,282
16.0
11,977
0
11,977
11,978
1.3
(INR m)
FY23E
69,977
11.7
18,684
26.7
2,472
16,212
110
500
16,602
0
16,602
2,241
332
2,573
15.5
14,028
0
14,028
14,029
17.1
(INR m)
FY23E
252
68,147
68,399
2300
3,649
74,349
39,268
16,015
23,253
708
2,719
59,922
22,707
13,227
17,569
6,419
12,254
10,893
1,362
47,668
74,349
FY14
252
19,344
19,597
1471
4,379
25,447
19,321
5,785
13,536
1,649
92
16,827
8,476
4,495
763
3,093
6,656
5,950
706
10,171
25,447
FY15
252
21,832
22,084
1743
8,286
32,113
25,463
7,459
18,004
2,672
162
17,285
9,266
3,530
1,248
3,242
6,011
5,471
540
11,275
32,113
FY16
252
22,340
22,592
1565
6,691
30,848
22,121
1,628
20,493
936
258
17,230
8,374
4,459
1,755
2,641
8,069
7,245
824
9,160
30,848
FY17
252
24,300
24,553
1705
5,290
31,548
23,508
3,350
20,158
621
1,358
17,458
8,822
5,002
359
3,276
8,047
7,141
906
9,410
31,548
FY18
252
26,633
26,886
1580
4,731
33,196
24,969
5,127
19,842
418
869
20,027
8,806
6,023
1,506
3,693
7,960
7,029
931
12,068
33,196
FY19
252
30,971
31,224
1457
3,505
36,342
26,657
6,951
19,706
361
1,204
24,217
10,725
6,815
2,823
3,854
9,147
8,190
957
15,070
36,342
FY20
252
35,903
36,275
1398
4,328
42,137
30,268
9,056
21,212
708
2,719
27,939
13,231
8,952
1,809
3,947
10,441
9,182
1,259
17,498
42,137
FY21E
252
46,041
46,293
1683
4,233
52,209
32,768
11,188
21,580
708
2,719
38,156
16,704
10,328
5,960
5,164
10,954
9,859
1,095
27,202
52,209
FY22E
252
56,222
56,474
1968
3,926
62,368
35,768
13,543
22,225
708
2,719
47,631
19,360
11,781
10,772
5,717
10,915
9,702
1,213
36,716
62,368
9 November 2020
7
 Motilal Oswal Financial Services
Ipca Laboratories
Financials and valuations
Ratios
Y/E March
EPS (INR)
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Debtor (Days)
Inventory (Days)
Working Capital Turnover (Days)
Leverage Ratio (x)
Interest Cover Ratio
Debt/Equity
Cash Flow Statement
Y/E March
Oper. Profit/(Loss) before Tax
Interest/Dividends Recd.
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
EO Expense / (Income)
CF from Oper. incl EO Exp.
(inc)/dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of shares
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Forex/ Business acquisition
Closing Balance
Bank balances / MF (gain)/ loss
Total Cash & Cash equivalent
FY14
37.5
45.7
155.3
5.9
15.4
60.7
14.7
8.9
35.9
0.3
26.9
22.3
24.9
2.7
50
94
105
26.3
0.2
FY15
19.8
34.4
175.0
1.0
4.9
115.0
13.0
9.4
55.7
0.0
12.0
10.1
9.8
2.0
41
108
116
12.3
0.3
FY16
10.5
21.0
179.0
0.0
0.0
216.5
12.7
10.1
85.6
0.0
5.9
5.5
5.3
1.5
56
106
94
5.4
0.2
FY17
16.1
29.8
194.6
1.0
6.2
141.8
11.7
9.1
65.7
0.0
8.6
7.5
7.1
1.6
56
100
103
11.3
0.2
FY18
19.0
33.1
213.0
1.0
5.2
120.1
10.7
8.9
63.9
0.0
9.3
8.6
7.7
1.6
66
98
117
11.5
0.1
FY19
36.3
49.5
247.4
1.0
2.8
62.8
9.2
7.6
40.2
0.0
15.8
14.3
14.0
1.9
65
104
118
28.3
0.0
FY20
51.4
64.3
286.5
7.2
14.8
44.3
8.0
6.2
30.3
0.3
19.2
17.7
18.0
2.3
70
104
123
45.3
0.1
FY21E
93.7
112.0
366.8
14.2
14.9
24.3
6.2
5.0
17.7
0.6
28.7
26.2
29.1
2.6
66
108
137
109.0
0.0
FY22E
94.9
113.6
447.5
14.3
15.0
24.0
5.1
4.5
17.2
0.6
23.3
21.8
25.7
2.9
68
113
151
113.8
-0.1
FY23E
111.2
130.7
542.0
16.7
15.0
20.5
4.2
2.7
11.0
0.7
22.5
21.3
27.0
3.1
68
118
157
147.6
-0.2
(INR m)
FY23E
18,684
500
-2,241
-4,155
12,788
0
12,788
-3,500
9,288
0
0
-3,500
0
-277
-110
-2,104
0
-2,491
6,797
11,917
0
18,713
-1,145
17,569
FY14
8,106
-500
-1,357
-339
5,910
-687
0
5,223
-3,887
1,336
-1
198
-3,690
0
-854
-269
-738
500
-1,361
172
567
4
743
20
763
FY15
5,291
358
-747
-619
4,282
358
-42
4,682
-7,166
-2,484
-70
343
-6,893
0
3,906
-284
-126
-991
2,505
294
743
0
1,037
211
1,248
FY16
3,417
169
-364
2,622
5,844
1,638
395
7,087
5,079
12,165
-96
-7,166
-2,183
0
-1,594
-316
0
-2,705
-4,615
288
1,037
364
1,689
67
1,755
FY17
4,448
226
-535
-1,647
2,491
328
0
2,819
-1,072
1,747
-1,100
684
-1,488
0
-1,401
-241
-126
177
-1,591
-260
1,689
0
1,428
-1,070
359
FY18
4,547
418
-636
-1,510
2,819
592
0
3,411
-1,258
2,154
489
-586
-1,354
0
-560
-240
-126
-378
-1,304
753
1,428
0
2,181
-676
1,506
FY19
7,170
483
-1,165
-1,686
4,803
365
157
5,010
-1,632
3,379
-336
317
-1,651
0
-1,070
-189
-126
-447
-1,832
1,528
2,181
0
3,709
-886
2,823
FY20
9,580
578
-1,412
-3,442
5,304
784
445
5,643
-3,958
1,685
-1,515
376
-5,097
0
804
-165
-902
-1,042
-1,305
-758
3,709
3
2,954
-1,145
1,809
FY21E
16,129
380
-2,137
-5,553
8,818
-171
8,989
-2,500
6,489
0
0
-2,500
0
-231
-128
-1,789
-190
-2,339
4,150
2,954
0
7,104
-1,145
5,960
FY22E
16,287
450
-1,996
-4,701
10,039
0
10,039
-3,000
7,039
0
0
-3,000
0
-307
-122
-1,797
0
-2,226
4,813
7,104
0
11,917
-1,145
10,772
9 November 2020
8
 Motilal Oswal Financial Services
Ipca Laboratories
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
9 November 2020
9
 Motilal Oswal Financial Services
Ipca Laboratories
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
9 November 2020
10