Indoco Remedies Q4 Review- Higher Remediation Expenses, Promotional Cost Impacted Margins: Prabhudas Lilladher

Prabhudas Lilladher Report

We cut our FY25/FY26 earnings per share by ~18% to factor in low margins and lower sales across key markets. Our numbers do factor in margin recovery with reduction in remediation cost from FY25.

Indoco Remedies Ltd.’s Q4 FY24 Ebitda was sharply below our estimates led by muted domestic formulation and EU sales and continued higher remediation and promotional expenses.

The recent official action indicated to its Goa unit-II is negative and will restrict growth in U.S. sales in FY25.

We expect 30% PAT CAGR over FY24-26E given low base. At current market price, stock is trading at 17.6 times FY26E EPS. We maintain our Accumulate with revised target price of Rs 335 valuing at 18 times FY26E EPS, as we roll forward.

Timely resolution of Goa facility unit-II is a key for re-rating.

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