Ipca Laboratories (Q4 FY13)

India Infoline News Service | Mumbai |

Ipca Labs reported numbers are well in line with our estimates. The company reported revenue growth of 19.7% yoy to Rs6.7bn vs. estimated revenue at Rs6.8bn.

CMP Rs607, Target Rs670, Upside 10.6%

  • Ipca Labs reported numbers are well in line with our estimates. The company reported revenue growth of 19.7% yoy to Rs6.7bn vs. estimated revenue at Rs6.8bn. Reported PAT de-grew by 14% yoy while adjusted PAT was in line with our estimate of Rs8.5bn. The top-line growth was led by strong growth in all key verticals and improved product mix aided company to report margin expansion of 129bps yoy at 21.2%.

  • Domestic formulations grew by 20.8% yoy to Rs1.8bn. The growth was primarily led byrobust growth in pain, cardiovascular and NSAID segments. The encouraging factor was that management maintained domestic revenue guidance of 17%-18% for FY14 and the impact of NPPP would not be substantial as the loss can be offset by price increases in selected products. Institutional business reported strong growth of 40% yoy to Rs885mn. The management expects institutional business to achieve revenue of Rs4.8bn in FY14. The UK market posted sharp recovery after continuous three quarters of dull performance (+50% yoy growth in Q4FY13).

  • At operating front, Ipca’s Q4 FY13 operating margin at 21.2% was slightly below our estimate of 22%. Margin contracted by 140bps qoq but improved 129bps yoy. Notable point was that the company managed to maintain performance at margins front, despite of increase in R&D expenses led by unanticipated new projects. For FY14, we expect margin to remain stable on the back of trivial impact of domestic pricing policy and higher R&D cost. Post ramp-up of Indore SEZ, (Indore SEZ was Inspected in April 2013 but material benefit to flow in from FY15 onwards) we expect margins to improve in FY15 to 23%. Higher taxes resulted in lower reported PAT at Rs7.59bn. Adjusted PAT at Rs8.8bn recorded growth of 21.9% yoy (adjusted for higher deferred taxes)

  • Ipca has consistently grown above 20% in the last 5 years. We expect robust performance to continue. Ipca has a strong franchise in Indian branded business coupled with high margin exports. We expect 18.4% CAGR in revenues and Adjusted PAT CAGR of 20.8% over FY13-15E.  We maintain BUY rating with a revised target price of Rs670.

Revenue Mix
QUARTERLY -(Rs mn)
Q4FY13
Q4FY12
%yoy
Q3FY13
% qoq
Domestic  Formulations
1,784
1,477
20.8
2,127
(16.1)
Domestic API
376
343
9.6
373
0.8
Export Formulations
3,131
2,392
30.9
3,175
(1.4)
Export API
1,296
1,319
(1.8)
1,249
3.8
Other Operating Income
131
80
62.8
86
51.8
Total Doemstic
2,160
1,820
18.7
2,500
(13.6)
Total Export
4,427
3,712
19.3
4,424
0.1
Total Formulation
4,915
3,869
27.0
5,302
(7.3)
Total API
1,672
1,662
0.6
1,622
3.1
Total
6717.7
5611.4
19.7
7010
(4)
 
Result table
(Rs mn)
Q4 FY13
Q4 FY12
% yoy
Q3 FY13
% qoq
Net Sales
6,718
5,611
19.7
7,010
(4.2)
(Inc)/Decrease in stock
(216)
(443)
(51.2)
(163)
32.8
Material consumption
(2,525)
(2,319)
8.9
(2,680)
(5.8)
Purchase of Traded Goods
(272)
(317)
(14.2)
(245)
11.1
Staff Cost
(889)
(855)
4.0
(983)
(9.5)
Other Expenditure
(1,824)
(1,447)
26.0
(1,682)
8.4
Operating Profit
1,424
1,117
27.5
1,
 

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