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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal has retained a ‘Buy' rating on Ipca Laboratories Ltd. with a target price of Rs 1,730, implying an upside of around 16% from current levels
Ipca Laboratories delivered a steady performance in the March quarter, with Motilal Oswal maintaining its bullish stance, citing strong growth visibility in domestic formulations and export markets.
The brokerage expects 17% earnings compound annual growth rate over FY26-28, driven by 12% CAGR in domestic formulation revenue, 20% CAGR in exports and better operating leverage.
Overall, Ipca remains in good stead for superior execution in DF as well as exports markets, sustaining the mid-teens return ratios over FY26-28.
IPCA Labs Q4 Results Highlights
- Q4 FY26 sales grew 6.3% YoY to Rs 2,390 crore vs estimate of Rs 2,360 crore.
- Revenue from subsidiaries declined 6% YoY to Rs 570 crore (25% of sales).
- Gross margin expanded 250bp YoY to 71%.
- Ebitda margin also expanded 120bp YoY to 20.3% vs estimate of 19.3%, driven by growth in gross margin, partly offset by higher other expenses (up 140bp YoY as % of sales).
- Ebitda grew 12.8% YoY to Rs 480 crore vs estimate of Rs 460 crore.
- Ipca Labs had exceptional expenses of Rs 45.82 crore due to the impact of new labor code and gain of Rs 60.04 crore on deconsolidation pursuant to the sale of Bayshore Pharmaceuticals LLC.
- Adjusted for the expense, PAT grew 19.2% YoY to Rs 290 crore vs brokerage estimate of Rs 280 crore.
- For FY26, revenue/Ebitda/PAT grew 8%/15%/27% to Rs 9,600 crore / Rs 2,000 crore / Rs 1,160 crore.
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