Ipca Labs - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, Ipca Labs (Ipca) reported lower -than-expected results. The top line grew by 16.7% yoy to Rs.553cr, below in-line with our estimates. Also, OPM came in lower than expected at 18.7%. This also resulted in adjusted net profit growth coming in at 14.8% yoy, ending the period at Rs.77cr. We recommend Buy on the stock.

Results lower than expectations: Ipca reported net sales of Rs.553cr, up 16.7% yoy, lower in-line with our estimate of Rs.673cr. The company posted OPM of 18.7% vs. expected 20.7%.Recurring profit came in at Rs.77cr, lower than our estimate of Rs.114cr. Segment wise, for 4QFY2012, the overall formulations business grew by 9.0% to Rs.386cr (Rs.356cr), contributing 70.0% to the company's total revenue. The API business witnessed 8.0% growth during the quarter to Rs.127.7cr, contributing 22.9% to the total revenue. Adjusted net profit for the quarter grew by 14.8% yoy to Rs.77cr.

Outlook and valuation: We expect net sales to post a 22.5% CAGR to Rs.3,474cr and EPS to register a 28.7% CAGR to Rs.36.3 over FY2012-14E, driven by the U.S. and domestic markets and the API segment. At current levels, the stock is trading at 10.7x and 9.4x FY2013E and FY2014E earnings, respectively. We recommend Buy on the stock with a price of Rs.435.

Source : Equity Bulls

Keywords