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Ipca Labs
Weak quarter; maintain Buy
Ipca’s 3QFY11 results were below expectations. Revenue grew
17.9% yoy to `4.6bn, slightly lower than our estimated `4.7bn.
But EBITDA margin declined 330bps to 19.5% which led to
7.2% yoy dip in adjusted net profit.
Export formulations, key driver. Export formulations grew a
strong 32.9% yoy led by growth across geographies. Anti-malarial
tenders fuelled major growth, with contribution of +10% sales to
export formulations. CIS markets witnessed revival after two
consecutive disappointing quarters.
Domestic formulations impacted by high base. Domestic
formulations witnessed an increase of only 11.7% yoy mainly on
account of tender business worth `76m in Q3FY10. Adjusting for
this, branded formulations grew 17% yoy, which is in line with our
expectations.
Outlook. We expect the growth momentum to continue, driven
by higher-than-industry growth in domestic formulations,
continuous expansion in export formulations and expectations of
a strong 4QFY11 and FY12. Margin pressure would continue for
the next two quarters and improve thereafter.
Valuation and risks. At current market price, Ipca trades at
12.3x FY12e and 10.8x FY13e earnings. We retain our target price
of `356 and reiterate our Buy recommendations.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Ipca Labs
Weak quarter; maintain Buy
Ipca’s 3QFY11 results were below expectations. Revenue grew
17.9% yoy to `4.6bn, slightly lower than our estimated `4.7bn.
But EBITDA margin declined 330bps to 19.5% which led to
7.2% yoy dip in adjusted net profit.
Export formulations, key driver. Export formulations grew a
strong 32.9% yoy led by growth across geographies. Anti-malarial
tenders fuelled major growth, with contribution of +10% sales to
export formulations. CIS markets witnessed revival after two
consecutive disappointing quarters.
Domestic formulations impacted by high base. Domestic
formulations witnessed an increase of only 11.7% yoy mainly on
account of tender business worth `76m in Q3FY10. Adjusting for
this, branded formulations grew 17% yoy, which is in line with our
expectations.
Outlook. We expect the growth momentum to continue, driven
by higher-than-industry growth in domestic formulations,
continuous expansion in export formulations and expectations of
a strong 4QFY11 and FY12. Margin pressure would continue for
the next two quarters and improve thereafter.
Valuation and risks. At current market price, Ipca trades at
12.3x FY12e and 10.8x FY13e earnings. We retain our target price
of `356 and reiterate our Buy recommendations.
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