IPCA Laboratories - March 2013 Results Preview - Motilal Oswal

- We expect Ipca Laboratories' (IPCA) 4QFY13E top line to grow 19% YoY at INR6.67b, led mainly by 30% growth in exports formulations. Domestic formulations would grow 18% YoY, while total API sales would grow 3% YoY on a high base in 4QFY12.

- EBITDA is likely to grow 18% YoY to INR1.32b, with a minor 20bp decline in EBITDA margin to 19.7%.

- We expect adjusted PAT to grow just 3% YoY to INR787m impacted by higher depreciation, lower other income and higher taxes. We expect significant ramp-up in IPCA's international formulations revenue led by 25% CAGR for both branded formulations and the US business over FY12-15E. Domestic formulations growth is likely to recover to 16%, while the institutional business is likely to record 19% sales CAGR for FY12-15E. We expect IPCA to clock FY12-15E EPS CAGR of 28% on the back of 17% revenue CAGR coupled with 180bp EBITDA margin expansion and reversal of MTM forex losses. Return ratios continue to be strong, with RoCE of ~28% and RoE of 27%, which reflect conservative management strategy and efficient capital allocation. The stock is valued at 13.3x FY14E EPS and 11.3x FY15E EPS. Reiterate Buy.

Source : Equity Bulls

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