Buy Ipca Laboratories, target price Rs 1110: JM Financial

JM Financial has buy call on Ipca Laboratories with a target price of Rs 1110. The current market price of Ipca Laboratories is Rs 923.9. Time period given by analyst is one year when Ipca Laboratories Ltd. price can reach defined target.

Ipca Laboratories Ltd., incorporated in the year 1949, is a Mid Cap company (having a market cap of Rs 23416.90 Crore) operating in Pharmaceuticals sector.

Ipca Laboratories Ltd. key Products/Revenue Segments include Pharmaceuticals, Other Operating Revenue, Export Incentives, Sale of services for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 1607.85 Crore, up 23.34 % from last quarter Total Income of Rs 1303.64 Crore and up 1.33 % from last year same quarter Total Income of Rs 1586.81 Crore. Company reported net profit after tax of Rs 148.43 Crore in latest quarter.

Investment Rationale
IPCA’s 1Q reported revenues were ahead of estimates meanwhile higher inventory costs, field force addition, lower impact of price hikes and higher overheads dented EBITDA margins. Management has lowered FY23 Revenue guidance to 9-10% (from 10-11%) and EBITDA margin to 21% (from 22-22.5%). Further, tax rate guidance comes in higher at 27-28% for subsequent years. EBITDA margins are expected to be on an improving trajectory hereon given the full impact of price hike benefits and absorption of overhead costs. It believes FY24 levers remain intact with robust domestic growth further supported by new MR addition, API boost from Dewas facility and strong margin rebound.

Promoter/FII Holdings
Promoters held 46.29 per cent stake in the company as of 30-Jun-2022, while FIIs owned 10.61 per cent, DIIs 33.5 per cent.