- Ipca Labs reported strong Q1FY27 with revenue, EBITDA, and net profit up 21%, 50%, and 72% YoY
- Nomura raised FY27 target price to Rs 2,060, implying 19% upside from current market price
- Company raised FY27 revenue growth guidance to 14-16% and EBITDA margin target to around 23%
Ipca Laboratories delivered a stronger-than-expected start to FY27, leading Nomura to raise its target price on the stock while retaining its 'Buy' rating.
Nomura analysts Saion Mukherjee and Kushal Chovatia raised the September 2027 target price to Rs 2,060 from Rs 1,900, implying around 19% upside from the current market price.
The brokerage has also raised its FY27 and FY28 earnings estimates after the company reported broad-based growth across businesses and geographies in the June quarter.
ALSO READ: Ipca Labs Q1 Results: Profit, Revenue Meet Estimates On Higher Global Sales
Strong Q1 Prompts Guidance Upgrade
Ipca's revenue, EBITDA and net profit rose 21%, 50% and 72% year-on-year (YoY), respectively, in Q1FY27, with all major business and geographic segments delivering double-digit growth.
Nomura highlighted particularly strong performance from the API and export businesses. Ipca also passed on higher raw material costs to API customers and implemented price increases across its India and international branded generics businesses.
The brokerage noted that institutional generic sales included about Rs 40 crore of deferred revenue from Q4FY26, but said growth remained robust even after adjusting for this one-off benefit. It estimates underlying revenue and EBITDA growth at around 19% and more than 45%, respectively.
The strong quarter has also led management to raise its FY27 guidance. Revenue growth is now expected at 14-16%, compared with the earlier 12-13% forecast, while the EBITDA margin target has been raised to around 23% from 22%.
Nomura Raises Earnings Estimates
Nomura has raised its FY27/FY28 sales estimates by around 2.5%, EBITDA estimates by 9% and PAT estimates by 13%, reflecting the stronger momentum and upgraded guidance.
The brokerage expects India formulation sales to sustain low-teens growth, while operating leverage and stable gross margins should support further margin expansion. It expects EBITDA margin to reach 23% in FY27, rising to 24% in FY28 and 24.8% in FY29.
According to management, the margin could eventually reach 25-26% over the next two years, providing another potential earnings growth lever.
Target Raised To Rs 2,060
Nomura values Ipca at 27.5 times September 2028 earnings, resulting in its new target price of Rs 2,060. The brokerage sees a fair valuation range of 23-29 times forward earnings, supported by the domestic formulations business, which contributes 45-50% of earnings.
While Nomura has moderated its valuation multiple from 29 times, it said this reflects the roll-forward of its target period rather than a deterioration in its fundamental outlook.
With the stock trading at 29 times FY27 earnings, 25 times FY28 and 21.6 times FY29, Nomura retains its Buy call, backed by stronger earnings momentum and improving margins.
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