Domestic formulation outperforms; APIbranded exports underperforms

Company
11 Mar 2024
5 Min read 
  • IPCA Laboratories delivered in-line performance in 3QFY24.
  •  Domestic formulation segment outperformed, while API/branded exports underperformed.
  •  Earnings estimate for FY24/FY25/FY26 reduced due to subdued outlook in API segment and lower off-take in branded generics segment.
  •  IPCA valued at 23x 12M forward earnings with a price target of INR1,080.
  •  IPCA expects better-than-industry growth in domestic formulation segment and is working to rebuild US business.
  •  Sales grew 33% YoY in 3QFY24, with DF sales growing 11% YoY and export formulations growing 8% YoY.
  •  EBITDA margin expanded 110bp YoY in 3QFY24.
  •  Expect 15% sales CAGR in DF segment and 16.5% sales CAGR in API segment over FY24-26.
  •  Return ratios expected to improve over FY24-26.
  •  Neutral stance on the stock reiterated.
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