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D o m e s t i c s l o w d o w n m i t i g a t e d b y e x p o r t s …
Ipca Laboratories’ Q2FY12 results were above our expectations.
Revenues increased 20.3% YoY to | 623.50 crore, above our expectation
of | 580 crore mainly driven by export formulations, in general, and the
institutional generic business, in particular. The institutional generic
business increased to | 90.8 crore from | 26.5 crore in Q2FY11. On the
flip side, the domestic formulations business witnessed muted growth of
3% to | 229.2 crore on the back of de-growth in the anti-malarial and
antibiotic segments. EBITDA margins rose by 250 bps YoY to 25.3%
despite lower growth in the domestic formulation business on the back of
higher margins from the generic business. Net profit, as expected,
declined by 17% YoY to ~| 78 crore (our expectation: | 71.4 crore) on
the back of forex losses of | 27 crore. We reiterate BUY rating on Ipca.
ƒ New pharma policy (if adopted) to be neutral
The management has indicated that the impact would be neutral if
the new draft pricing policy comes into existence. Around 67% of
the total product basket will come under the new pricing policy.
However, the majority of Ipca’s brands are relatively low priced.
Hence, the company would not suffer any negative impact. Only in
segments such as rheumatoid arthritis and anti-malarial, in which
the company is among the top players, there might be a negative
impact of around 2-3%.
ƒ Upgraded institutional generic sales guidance
The institutional generic business (anti malarial) posted robust
growth of 242% YoY to | 90.8 crore during the quarter taking total
sales in the first half to ~| 140 crore. The company has upgraded its
sales guidance to ~ | 250 crore from | 200 crore earlier.
V a l u a t i o n
Currently, Ipca is trading at | 254 i.e. ~11x FY12E EPS of | 22.4 & ~8x
FY13E of | 29.8. Despite strong growth expected from export formulation
business, we have reduced our target price to | 358 i.e. 12x FY13 E EPS
of | 29.8 from | 366 earlier due to 1) delay in Indore facility approval and
2) bit of uncertainty regarding performance of domestic formulations.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D o m e s t i c s l o w d o w n m i t i g a t e d b y e x p o r t s …
Ipca Laboratories’ Q2FY12 results were above our expectations.
Revenues increased 20.3% YoY to | 623.50 crore, above our expectation
of | 580 crore mainly driven by export formulations, in general, and the
institutional generic business, in particular. The institutional generic
business increased to | 90.8 crore from | 26.5 crore in Q2FY11. On the
flip side, the domestic formulations business witnessed muted growth of
3% to | 229.2 crore on the back of de-growth in the anti-malarial and
antibiotic segments. EBITDA margins rose by 250 bps YoY to 25.3%
despite lower growth in the domestic formulation business on the back of
higher margins from the generic business. Net profit, as expected,
declined by 17% YoY to ~| 78 crore (our expectation: | 71.4 crore) on
the back of forex losses of | 27 crore. We reiterate BUY rating on Ipca.
ƒ New pharma policy (if adopted) to be neutral
The management has indicated that the impact would be neutral if
the new draft pricing policy comes into existence. Around 67% of
the total product basket will come under the new pricing policy.
However, the majority of Ipca’s brands are relatively low priced.
Hence, the company would not suffer any negative impact. Only in
segments such as rheumatoid arthritis and anti-malarial, in which
the company is among the top players, there might be a negative
impact of around 2-3%.
ƒ Upgraded institutional generic sales guidance
The institutional generic business (anti malarial) posted robust
growth of 242% YoY to | 90.8 crore during the quarter taking total
sales in the first half to ~| 140 crore. The company has upgraded its
sales guidance to ~ | 250 crore from | 200 crore earlier.
V a l u a t i o n
Currently, Ipca is trading at | 254 i.e. ~11x FY12E EPS of | 22.4 & ~8x
FY13E of | 29.8. Despite strong growth expected from export formulation
business, we have reduced our target price to | 358 i.e. 12x FY13 E EPS
of | 29.8 from | 366 earlier due to 1) delay in Indore facility approval and
2) bit of uncertainty regarding performance of domestic formulations.
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