Indoco Remedies Q1 Results Review - Another Muted Quarter: Prabhudas Lilladher

Prabhudas Lilladher Report

We cut our FY25/FY26 earnings per share estimates of Indoco Remedies Ltd. by ~37%/14% to factor in low margins and lower sales across key markets. Our numbers do factor in margin recovery with reduction in remediation cost from H2 FY25.

Indoco Remedies’ Q1 FY25 Ebitda was sharply below our estimates led by muted U.S. sales and lower gross margins.

The recent official action indicated to its Goa unit-2 is negative and will restrict growth in U.S. sales in FY25. We expect 30% profit after tax compound annual growth rate over FY24-26E given low base.

At current market price, stock is trading at 20.5 times FY26E EPS. We maintain our Accumulate with revised target price of Rs 320 valuing at 20 times (18 times earlier) FY26E EPS. Timely resolution of Goa facility unit-II is a key for re-rating.

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