Views on IPCA Labs 2QFY2016 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking) on IPCA Labs 2QFY2016 Results:

"For 2QFY2016, the company posted sales in line, while the net profit posted numbers lower than estimates. The company posted a 4.7% de-growth in sales to end the period at INR 739cr V/s INR 750cr expected and INR 775cr in 2QFY2015, on back of domestic and exports posting a dip of 2.3% and 6.9% respectively. In domestic markets (INR 364cr) posted a dip of 2.3% YoY, mainly on back a tepid formulation sales (INR 331cr), a YoY growth of 0.9%, while API sales (INR33cr), a 25.3% YoY dip. In exports (INR 375cr) a YoY dip of 6.9%, on back of dip in formulation exports (INR 227cr) a dip of 25.7% YoY, while API exports (INR 147cr) posted a YoY growth of 52.9%.

On operating front, the EBITDA margins came in at 10.6% V/s 11.4% expected V/s 10.0% in 2QFY2015, on back of lower than expected sales during the quarter. While Gross margins, came in at 62.0% V/s 65.0% in 2QFY2015. Thus, the Adj. net profit came in at INR31cr V/s INR41cr expected and INR68cr in 2QFY2015, a YoY dip of 54.3%. However, on back of INR 24cr forex losses, the company posted a net profit of INR 12cr V/s INR61cr, a YoY dip of 80.9% YoY. While the current performance of the company is impacted on back of its key plants being under the USFDA scanner, we believe once out of it, the company can bounce back to its normalized ROE's of 25%. Thus we maintain our BUY with a target price of INR 900."

Shares of IPCA LABORATORIES LTD. was last trading in BSE at Rs.781.8 as compared to the previous close of Rs. 783.7. The total number of shares traded during the day was 139118 in over 6153 trades.

The stock hit an intraday high of Rs. 795 and intraday low of 751. The net turnover during the day was Rs. 108218425.

Source : Equity Bulls

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