9 IPCALAB share price target reports by brokerages below. See what is analyst's view on IPCALAB share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
We value IPCA at 22x 12M forward earnings to arrive at a price target of INR1,660. Superior execution, lower financial leverage and healthy return ratios reinforce our positive stance on the company. Reiterate Buy.
We have met the IPCA Management Team and came out more confident about their new growth path focusing on non-US markets, especially in the Global tender business and new avenues in EU generics. Their emphasis on India formulations, branded generics and API continues to provide base revenue growth. We like the positioning of IPCA's sources of growth, which draw zero revenues from the US while India’s branded business and key ROW markets are set to drive growth and margin. This will result in a highly favorable risk- return matrix as business risk and regulatory risk is minimum with limited downsides from USFDA. With a very low risk of return per unit in comparison to peers, we maintain ‘BUY’ and retain TP Rs1,826 on PE 23x of FY22E earnings. We estimate earnings CAGR 20% over FY20-22E led by a comeback in the UK generic and tender business while maintaining US revenue contribution to remain at the current level. The positive outcome from resolution with USFDA in FY21E would lead to a further upside to our earnings estimates.
EBITDA margin guided to improve by 100-150 bps YoY in FY21E and FY22E due to the benefits of operating leverage, re-entry in UK generics, traction in branded generics and strong demand of high value APIs. We expect Global Fund business may shift some of its sales to FY21E. IPCA trades at PER of 21.6x (FY21E) and 18x (FY22E). We have increased our earnings estimate by 34% (FY21E) and 40% (FY22E) and increased our PE multiple to 23.3x(earlier 22x)due to better visibility in tender business, generic export and reduction in effective tax rate.We have upgraded the stock to ‘BUY’ from Accumulate with TP to Rs1826 (from Rs1238) on PE 23.3x of FY22 earnings.
IPCA is on a strong footing and is well placed to capitalize on the growth opportunities across the domestic and exports markets. Performance across the Formulation and API segment is expected to improve as most headwinds that impacted the performance are behind. Management has maintained its salesand profitability guidance. However, given the robust performance inQ2FY2020, we have revised our earnings estimates upwards for FY2020 /FY2021. We expect the company to a report sales/profit CAGR of 19%/32%over FY2019-FY2021. At CMP the stock is trading at an attractive P/E multiple of 17.6x its FY2021 earnings. We maintain our Buy recommendation on the stock with a revised PT of Rs. 1,220. Successful resolution of the USFDA regulatory issues could provide further upside with the potential for upgrade of earnings estimates.
IPCA beats in Q1FY20 as its sales, EBITDA and PAT grew 9%, 15% and 26% above our estimates. IPCA took the benefit of high demand and price of Sartan APIs in global markets (mainly EU) due to contamination issues in API of the major manufacturers. The contribution of APIs however lower to 26% in Q2FY20 vs 30% in Q1FY20. This has resulted in higher gross margins by 210bps QoQ. Strong contribution from India formulations, branded generic exports and tender supplies made the overall growth balanced and improved headline margins. EBITDA margin improved by 227bps QoQ due to better revenue mix and lower remedial costs. IPCA is global leader in volume of losartan API production (Rs1.2bn sales in FY19) and its valsartan sales is improving from current run rate of Rs25m/month. It guided more than 20% growth in API sales in H2FY20E.
Domestic business guidance of 13-15% is ahead of prior indication while API growth has surprised on the upside. This leads to a cut in margin due to rise in API share even as the reduction is cushioned by larger base of absolute EBIDTA. We like the revenue visibility coupled with lack of margin volatility due to absence of US business. Retain BUY based on 21x FY21 PE, at a premium to the sector valuation with unchanged 1-year PT of Rs1,100.
ACCUMULATE | CMP: Rs940 | TP: Rs1,008 EBITDA margin is guided to improve by 100-200bps in FY20E due to the benefits operating leverage. We expect slower offtake of Global Fund business may shift some of its sales to FY21E. IPCA trades at PER of 22x (FY20E) and 18.3x (FY21E). With better visibility of exports, we increase our TP to Rs1,008 (from Rs908) on PE 20xof FY21 earnings while downgrade ourratings to ‘Accumulate’ as upside potential at current valuation is 8%.
We reduce our Revenues by 3.4%/2.7% for FY20E/FY21E due to downgrade in Generics and Branded business. We upgrade our EBITDAM for FY20E/FY21E by 180 bps for both the years to 21.6 % /22.4 %respectively. We upgrade our EPS estimates by 8.2% /6.2% to Rs 46.9/Rs 58.3 for FY 20E/FY21E. We maintain our BUY rating and price target of Rs 1090 based on 18.6x FY21E.
The company has demonstrated significant improvement in the financials in FY19 with ~15% sales growth, 450 bps improvement in EBITDA margins and more importantly 630 bps improvement in ROCE. This, we believe was attributable to industry beating growth in the domestic formulations and strong growth in APIs. Going ahead, with firm growth tempo in the domestic formulations and good prospects both for API exports and formulation exports we expect further improvement in the financial parameters. The company will continue to remain a compelling bet on the back of well- rounded growth prospects for FY19–21E- sales, EBITDA and PAT CAGR of 14%, 22% and 27%, respectively. We arrive at our target price of Rs 1130 (20x FY21E EPS of | 56.4).
Sustained outperformance in branded domestic formulation (DF) space coupled with enhanced opportunities in the API segment and additional business from institutional Anti-Malaria segment shows that IPCA has enough headroom to be on a strong earnings trajectory over the next 2-3 years. We expect IPCA to end FY19 with earnings similar to that in FY14 (pre-import alert from USFDA); despite the USFDA issues being unresolved. This implies healthy performance in the branded generics segment. We raise our EPS estimate by 6%/7% to INR45.3/INR54.4 for FY20/21. We continue to value IPCA at 21x 12M forward earnings to arrive at a price target of INR1,145 (from INR970 earlier). Re-iterate BUY.
IPCA guided for a 20% growth in AP, 15% growth in India and overall revenue growth of 13% in FY20E-22E without discounting revenue from US. We assume 15% CAGR in revenues during FY18-21E with turnaround in EU generics and partial success in US generics. We maintain our earnings estimates and the stock trades at PE 20.5x FY20E and 16.9x FY21E respectively. We maintain ‘Buy’ and retain TP at Rs921.
We raise our EPS estimate by 15%/3%/5% for FY19/20/21 to factor in the improved prospects for the branded business, the revival in business from the UK, lower remediation costs, and improved profitability. We roll to 21x (unchanged) 12M forward earnings to arrive at a PT of INR970 (prior: INR910). We maintain our positive stance on IPCA on the back of better-than-industry growth in DF, renewed institutional anti-malaria business and healthy growth in branded exports. Resolution of USFDA issues could provide further upside. Re-iterate Buy.
Q3 revenues were in line and a comprehensive beat on the margins front led by a better product mix, forex gain and lower incentives to MRs. Domestic markets reported double digit growth across segments excluding anti malaria in 9MFY19. On the exports front, dispersible tablets (DT) and injectable tender could propel growth in the overall tender business from FY120. The Sartan opportunity is also likely to support the generic business. The fortunes of API exports and branded formulation exports look promising over the next two to three years. The current capacity utilisation (operating leverage) remains low and is expected to increase with growing revenues. Overall, things are looking much stable over the course of the next two to three years both on the revenues and margins front. With growing influence of ex-US segments in earnings, the company will continue to remain a compelling bet at this level given the FY18–21E growth prospects - sales, EBITDA and PAT CAGR of 14%, 18% and 20%, respectively. We arrive at our target price of Rs 900 (17x FY21E EPS of Rs 53.0).
EBITDA margin is guided to improve by 200bps in FY19E due to the benefits operating leverage. We expect key fundamentals to improve gradually and set-off for bigger momentum once FDA issues resolves. IPCA trades at PER of 17.4x (FY20E) and 14.3x (FY20E). we rolled forward our earnigns estimates to FY21E and derive new TP of Rs921 on PE 18x of FY21E estimates. We maintain ‘BUY’.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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