Ipca Labs Q1 Results Review - Domestic Formulation Drives Earnings: Motilal Oswal

Motilal Oswal Report

Ipca Laboratories Ltd. delivered better-than-expected Q1 FY25 earnings. The improved performance in the domestic formulation segment was offset to some extent by a subdued show in exports and active pharma ingredient segment. Unichem also reported YoY sales growth and margin gains.

We raise our earnings estimates by 10%/9% for FY25/FY26 factoring in a robust outperformance in DF, rising profitability of Unichem, a gradual pickup in API segment, and extended benefits of lower raw material costs.

We value Ipca at 27 times 12 months forward earnings to arrive at a target price of Rs 1,310.

Ipca continues to see robust growth in the DF segment (better than industry growth) and an improved performance of Unichem business. However, exports and the API segment affected the performance to some extent.

Accordingly, we estimate a 46% earnings CAGR over FY24-26. Considering valuation of 17 times enterprise value/ FY26 Ebitda and 30 times FY26E EPS, the upside is earnings is largely captured. Maintain Neutral.

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