Choice Equity Broking's report on Ipca Laboratories
IPCA Labs Q2FY23 earnings were below our expectations as Revenue/ EBITDA / PAT saw a negative deviation of 2.4%/12.7%/21.8% from our estimates. IPCA reported a top line of INR 16,010mn (up 3.7% YoY and 1% QoQ) due to lower demand in the Latin America and Asia markets. Q2FY23 EBITDA at INR 2,606mn (down 28.7% YoY and 3.2% QoQ) and margin at 16.3% (down 739bps YoY and 70bps QoQ) due to higher raw material expenses, energy, and marketing cost. PAT at INR 1,439mn de-grew by 42.5% annually and remained flat on the sequential basis. We believe going forward the revenue will be impacted by a decline in the API and anti-malarial business and elevated fixed costs will impact the margins.
Outlook
We introduce FY25 estimates and value the stock based on Sep-24E EPS to arrive at a target price of INR 908 (valuing at 24x) and maintain our NEUTRAL rating on the stock.
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