Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

BUY Ipca Laboratories - Q4FY22 Result Update - Weak exports; gradual recovery

Posted On: 2022-06-18 12:21:40 (Time Zone: IST)

Mr. Param Desai Research Analyst at Prabhudas Lilladher Pvt. Ltd.

Quick Pointers:

- Guided 10-12% revenue growth and 22-22.5% OPM for FY23.

- Added 1200 MRs in domestic formulation biz; launching 4 new divisions.

IPCA Lab's (IPCA) Q4 performance was impacted by weak exports, however API, UK and branded generics issues should normalize from H2FY23, in our view. Domestic business (45% of total sales) remained strong and it will continue to outperform IPM. Strong API capabilities and diversified model have benefited IPCA in the current environment. Our FY23E and FY24E EBIDTA stands reduced by 3% yet PAT cut is higher by 7-10%, as management indicated 25% tax rate vs 22-23% earlier. We recommend 'Buy' rating with revised TP of Rs 1,085 based on 23x FY24E earnings.

In-line revenues; weak export sales: IPCA's sales grew 16% YoY at Rs 12.9bn, in line with our estimates. Domestic business grew strongly 27% YoY, while export formulation remained weak with 3% YoY (flat QoQ) growth. Institutional business was up by mere 5% YoY lower than our est, due to lower order offtake. Branded and generics business were up by 2% YoY. Export API declined by 19% QoQ due to lower sales from Sartans and sales return. Domestic API grew by 52% YoY. Revenue from subsidiaries in Q4 came in at Rs 1.2bn.

Healthy GM; higher other expenses EBITDA margins came at 17.2%- down 365bps QoQ impacted by negative operating leverage. There were one-time impairment charges to tune of Rs225mn. Adj for this OPM came in at 19%. Gross margins were at 66.9% (PL est 65%) in Q4- up 180bps QoQ, mainly on better product mix. There was forex loss of Rs20m. Adj for forex, overheads grew 14% YoY led by higher freight cost. Staff cost also grew by 16% YoY led by higher provision of incentives to field staff. PAT declined by 19% YoY to Rs 1.3bn vs our est of Rs1.4bn.

Key Concall takeaways: (1) Though company has resolved the issue of Azido impurity and Sartan, growth is expected to be gradual and should normalize from Q2FY23 (2) Guided for 68-69% GM in FY23 on standalone nos (3) Institution business continued to be impacted due to lower order offtake and guided for flat revenue growth in FY23. (4) UK business to remain muted in FY23; targeting more registrations and commercialization of product on own labels (so far done 7 -8 registrations out of 44). During Q4 sales from UK were down to Rs200mn vs Rs600mn in Q4FY21 (5) Ipca will be adding 1200 MRs to 6000 for domestic formulation biz in FY23, which may result in higher employee cost. Guided for 12-13% growth in Domestic formulation biz in FY23 (6) API biz- Benefit from Dewas plant commercialization will be seen from Q2FY24. Will regain Sartan biz gradually. Guided for 10% growth in API business in FY23 (7) Higher inventory as of FY22, in order to avoid any supply disturbances due to China issues (8) Minimal impact of Russia issues to branded generics biz; Guided for 20% growth in FY23.

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Gladiator Stocks - Minda Industries - ICICI Direct

Reliance Industries - Company Update - In fine fettle amidst global uncertainty - BUY

Sector Update - Sugar - ICICI Direct

Initiating Coverage - Hindustan Aeronautics Ltd - ICICI Direct

Rallis India - Company Update - Margin pressure likely to persist in near term..!! - Upgrade to 'BUY'

Indoco Remedies - Q4FY22 Result Update - In-line quarter; strong revenue guidance for US & EU mkt - Upgrade to 'BUY'

Indraprastha Gas - Q4FY22 Result Update - Impressive performance - BUY

KEC International - Annual Report Analysis - Healthy outlook across business segment - Accumulate

Westlife Development - Q4FY22 Result Update - Approaching the tipping point; Buy for LT Gains

Reliance Research downgrades Bajaj Auto to Sell

NOCIL - Q4FY22 Result Update - Strong operating performance amidst challenges - BUY

Gujarat Gas - Company Update - Deftly negotiating through tough times - BUY

Orient Electric - Gaining market share via innovation: initiate with ADD - ICICI Securities

Manappuram Finance - Q4FY22 Result Update - Intense Competition Put Pressure on Yields - BUY

Derivatives Weekly View - June 24, 2022 - ICICI Direct

Stock Tales - Newgen Software - ICICI Direct

Weekly Report - June 25, 2022 - Mr. Mitul Shah - Head of Research at Reliance securities

Gladiator Stocks - Bosch - ICICI Direct

Management Meet Update - Sheela Foam - ICICI Direct

Gladiator Stocks - Mahindra & Mahindra - ICICI Direct

Banks - Modifications to PPI and its impact on cards - Negligible impact, if any, for stocks under coverage

LIC Housing Finance - Q4FY22 Result Update - Fixed rate liabilities could cushion NIM - BUY

Navneet Education - Q4FY22 Result Update - Growth levers in place - BUY

MPC Minutes: Jun-22: All eyes on inflation - Acuité Ratings

Nazara Technologies - Management Meet Update - Breaking through the ESports landscape - BUY

Sector update - Quick Service Restaurants - YES Securities

JK Lakshmi Cement - Q4FY22 Result Update - Strong performance; Valuations drive upgrade - Accumulate

Would it be wise to invest in a home early in your career?

Dr. Reddy's Laboratories - Analyst Meet Update - Multiple growth initiatives - BUY

Dhanuka Agritech - Management Meet Update - 1Q likely to be subdued; all hopes pinned on the monsoons - BUY

Acuité expects India's current account deficit to widen to more than USD 90 bn in FY23 - Acuité Macro Pulse

Inflationary concerns will continue to weigh on the pace of economic revival in FY23 - Acuité Macroeconomic Performance index

City Union Bank - Q4FY22 Result Update - Asset quality on the mend - BUY

Banks - BNPL - Early results are not that exciting as yet - Kotak

Acuité expects FY23 GDP growth estimate at 7.5% - Acuité Macro Pulse - Growth - May-22 Edition

Base factor pushes up IIP in Apr-22 to an 8-month high - Acuité Ratings

India Strategy & Q4FY22 Review - Long term growth prospects to overshadow near term uncertainties

India Equity Strategy - Quarterly flipbook: Q4FY22-Cost inflation driving downgrades

FMCG - D2C is here to stay; omni-channel the way forward - HDFC Securities

Automobile Sector - Monthly Quick View - May'22 - Steady Performance Improvement, backed by Gradual Rural Recovery

BFSI - New normal rate cycle; brace for transmission effects - HDFC Securities

SBI Cards and Payment Services - BUY - TP Rs. 1260 - YES SECURITIES

RBI frontloads rate hike amid increased inflationary headwinds - Acuité Ratings

Monetary Policy June 2022 - Axis MF Views

RBI Monetary Policy View - Mr. Dhiraj Relli, MD & CEO, HDFC Securities

Monetary Policy - entering the red zone - Anuj Puri, ANAROCK

Mr. Murali Ramakrishnan, MD &CEO, South Indian Bank on RBI Monetary Policy

Comments on RBI's MPC Policy Jun'22 - Acuité Ratings

Views on RBI Monetary Policy - June 2022

Bayer Cropscience - Q4FY22 Result Update - Healthy all round performance - BUY

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020