Prabhudas Lilladher
IPCA Laboratories (Buy)
CMP: ₹869.3
Target: ₹921
We met IPCA Laboratories management, who charted out its vision to achieve a resolution with USFDA and turn around its business verticals which had faced challenges since CY15. IPCA’s institutional tender business for anti-malaria drugs would substantiate its medicines supply to the global fund from April FY20E. Meanwhile, its partner Bristol Lab received resolution of UKMHRA which paved way for IPCA’s generics in the country. With the addition of one more partner, IPCA expects its existing portfolio of UK generics to take a few quarters more to regain its market position. Branded business both in India and ROW markets will sustain momentum and benefit from operating leverage from new launches without proportionate increase in overheads.
IPCA guided for a 20 per cent growth in AP, 15 per cent growth in India and overall revenue growth of 13 per cent in FY20E-22E without discounting revenue from US. We assume 15 per cent CAGR in revenues during FY18-21E with turnaround in EU generics and partial success in US generics.
We maintain our earnings estimates and the stock trades at PE 20.5x FY20E and 16.9x FY21E respectively. We maintain ‘Buy’ and retain target price at ₹921.