IPCA's 3QFY12 performance was above estimates led by international formulations::Motilal oswal,

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IPCA's 3QFY12 performance was above estimates led by international formulations
Key highlights
 IPCA's 3QFY12 operational performance was above estimates with revenue growth of 32% YoY to INR6.15b
(est of INR5.5b), EBITDA growth of 66% at INR1.51b (est of INR1.11b) and PAT at INR639m.
 Revenue growth was led by strong 73% YoY growth in international formulation business. Branded generics
business grew by 45% YoY while pure generic business (Ex-institutional business) reported growth of 33% YoY.
Institutional business grew almost 3x to INR925m led by new tenders from WHO. However, domestic
formulation business reported muted growth of 5.7% YoY to INR1.87b.
 EBITDA grew by 66%YoY to INR1.51b while EBITDA margins expanded by 590bps YoY to 24.6% led by 1) strong
revenue growth, 2) improvement in gross margins and 3) favorable currency movement.
 Adjusted PAT remained flat at INR639m, despite robust operating performance, due to INR400m of forex
losses related to foreign currency loans and hedges.
Outlook and View
Expect 23% earning CAGR over FY11-13: We expect IPCA to clock FY11-13 PAT and EPS CAGR of 23% on the back of
20% revenue CAGR coupled with margin expansion. EBITDA is expected to record 29% CAGR for FY11-13. EPS
growth is lower than EBITDA growth due to lower other income and increased taxes. Further, despite INR5b capex
over FY12-13 (to sustain growth), the company is likely to record healthy return ratios and low gearing. The stock
is currently valued at 11.4x FY12E EPS and 9.5x FY13E EPS. The stock trades at 25-50% discount to its historic and
peer valuation. Reiterate Buy with target price of INR443 (14x FY13E EPS).