Ipca Laboratories Ltd Reco: BUY CMP: Rs 299 Target Price: Rs 420 :gepl

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Ipca Laboratories Ltd

Reco: BUY

CMP: Rs 299

Target Price: Rs 420

Solid performance, Upgrade estimates – Maintain Buy

·      IPCA’s Q3FY12 results were in-line with expectations with a) Revenues at Rs6bn (up 30% YoY), b) EBITDA at Rs1.5bn (up 66% YoY) and c) APAT at Rs1bn (up 88% YoY)

·      Revenue growth was led by strong growth in exports aided by INR dep. Domestic business continues to struggle but is expected to recover & grow by 13-15% in Q4’12E & FY13E

·      Gross and EBITDA margins improved by 235bps and 550bps YoY to 61% and 25% respectively led by INR dep and strong uptake in institutional business which is expected to continue going forward

·      On back of strong results and expected USFDA approval for Indore facility, we revise earnings upwards by 18%/ 7% for FY12/13E. Re-iterate Buy with a revised target of Rs420 (14xFY13 EPS)