Accumulate Ipca Laboratories, target price Rs 1000: Prabhudas Lilladher

Prabhudas Lilladher has accumulate call on Ipca Laboratories with a target price of Rs 1000. The current market price of Ipca Laboratories is Rs 907.5.

Ipca Laboratories, incorporated in the year 1949, is a mid cap company (having a market cap of Rs 23038.88 crore) operating in Pharmaceuticals sector.

Its key products/revenue segments include pharmaceuticals, other operating revenue, export incentives, sale of services for the year ended March 31, 2022.

Financials
For the quarter ended June 30, 2022, the company has reported a consolidated total income of Rs 1607.85 crore, up 23.34 per cent from last quarter total income of Rs 1303.64 crore and up 1.33 per cent from last year same quarter total income of Rs 1586.81 crore. Company has reported net profit after tax of Rs 148.43 crore in latest quarter.

The company’s top management includes Mr.Premchand Godha, Mr.Ajit Kumar Jain, Mr.Pranay Godha, Mr.Prashant Godha, Mr.Anand T Kusre, Mr.Dev Parkash Yadava, Dr.(Mrs.)Manisha Premnath, Mr.Kamal Kishore Seth. Company has G M Kapadia & Co as its auditors. As on 30-06-2022, the company has a total of 25 Crore shares outstanding.

Investment rationale
The brokerage expects 31% EPS CAGR over FY23-25E vs 20% EPS decline over FY21-23Eon back of strong domestic formulation business (45% of total sales), which continues to outperform IPM.

Additionally, export business is also on a gradual recovery mode with UK and export API business expected to normalize by Q4F23. At CMP, stock is trading at 22x FY24E and 18x FY25EP/E. Upgrade to ‘Accumulate’.

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.