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Ipca Laboratories 3QFY2014 performance highlights and results update

January 30, 2014, Thursday, 06:18 GMT | 01:18 EST | 10:48 IST | 13:18 SGT
Contributed by Angel Broking


Ipca Laboratories (Ipca), posted better-than-expected results on the net profit front, mainly on back of better than expected OPM expansion. The company posted net sales of Rs.815cr (vs an estimated Rs.824cr), posting a yoy growth of 17.7%. The OPM came much ahead of expectation; expanding by 284bp yoy to end the period at 24.5%. On back of the same, the adjusted net profit came in at Rs.141cr (vs our expectation of Rs.123cr), registering a growth of 37.2% yoy. We remain Neutral on the stock.
 
Results better than expectations: The company posted net sales of Rs.815cr (vs an expected Rs.824cr), posting a yoy growth of 17.7%. The growth was led by exports sales, which rose 19.1% yoy, while domestic sales posted a growth of 15.3% yoy. Domestic formulation sales grew by 15.8% yoy. The OPM came much ahead of expectation, expanding by 284bp yoy to end the period at 24.5%. On back of the same, the adjusted net profit came in at Rs.141cr (vs our expectation of Rs.123cr), registering a growth of 37.2% yoy. This came in spite of the higher tax outgo during the period, which was around 26% of PBT vs 19% in the corresponding period of last year. The adjusted net profit was aided by better-than-expected OPM and reduction in interest expenses (Rs.5cr vs Rs.26cr in 3QFY2013).
 
Outlook and valuation: We expect net sales to post a 20.9% CAGR to Rs.4,087cr and EPS to register a 39.8% CAGR to Rs.52.7 over FY2013–15E, driven by the US and domestic markets and the API segment. At the current levels, the stock is trading at 18.7x and 15.2x FY2014E and FY2015E earnings, respectively. We remain Neutral on the stock.