Visit http://indiaer.blogspot.com/ for complete details Ipca Laboratories
Ipca Labs reported 2QFY2011 results, which were a mixed bag. Net sales stood at healthy
`514cr (`429cr), up 19.9% yoy, ahead of our estimates of `487cr. The company reported
flat gross margins of 60.2% (59.5%). However, employee and other expenses grew by
21.8% to `70cr (`57cr) and 29.7% to `126cr (`97cr), respectively. Consequently, OPM
contracted to 22.2% (23.5%). Ipca Labs’ recurring net profit stood at `70cr (`64cr), up
10% yoy, impacted by lower OPM, higher depreciation and tax charges. The company also
recorded forex translation gain of `29cr during the quarter, which boosted overall reported
net profit to `94cr (`64cr), up 47% yoy. The stock is currently trading at 16.0x FY2011E
and 12.9x FY2012E earnings. We maintain Neutral on the stock at these levels.
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