Ipca Labs - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Ipca Labs (Ipca) reported higher than expected results on the net profit front. The top line grew by 19.7% yoy to Rs.630cr, below our expectations of Rs.684cr. However, the OPM's came much higher than expected at 21.8% V/s 20.4%. This aided the company to post a higher growth in the adjusted net profit growth coming in at 87.0% yoy, ending the period at Rs.115cr. We recommend a buy on the stock.

Results better than expectations: Ipca reported net sales of Rs.630cr, up 19.7% yoy, lower than our estimate of Rs.684cr. The company posted OPM of 21.8% vs. expected 20.4%.Recurring profit came in at Rs.115cr, higher than our estimate of Rs.86cr. Segment wise, for 1QFY2013, the overall formulations business grew by 13.4% to Rs.448.7cr (Rs.395.6cr), contributing 71.2% to the company's total revenue. The API business witnessed strong 38.9% growth during the quarter to Rs.181.6cr, contributing 28.8% to the total revenue. Adjusted net profit for the quarter grew by 87.0% yoy to Rs.115cr.

Outlook and valuation: We expect net sales to post a 21.4% CAGR to Rs.3,474cr and EPS to register a 29.5% CAGR to Rs.36.6 over FY2012-14E, driven by the U.S. and domestic markets and the API segment. At current levels, the stock is trading at 14.0x and 11.2x FY2013E and FY2014E earnings, respectively. We recommend a buy on the stock with a price of Rs.475.

Source : Equity Bulls

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