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Prabhudas Lilladher Report
Indoco Remedies Ltd.'s cut our FY25/FY26 earning per share by ~10%/4% to factor in low margins and lower sales across regulated markets. We downgrade stock from 'Buy' to 'Accumulate' given weak earnings visibility, muted domestic formulation sales.
Our numbers do factor in margin recovery with reduction in remediation cost from FY25. Indoco Remedies Q3 FY24 Ebitda was sharply below our estimates led by continued higher remediation cost and lower regulated market sales.
The recent official action indicated to its Goa unit- two is negative and will restrict growth in U.S. sales in FY24/H1 FY25.
We expect 18% profit after tax compound annual growth rate over FY23-26E.
At current market price, stock is trading at 20.5 times FY25E earning per share.
We downgrade stock to 'Accumulate' from 'Buy' with revised target price of Rs 380 valuing at 18 times December 2025E earning per share, as we roll forward. Timely resolution of Goa facility unit-two is a key for re-rating.
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