Ipca Labs Target Price Cut by Brokerages After Weak Q4, Predict 9% Drop

On May 31, Ipca Laboratories share price drop by 4% in early trading after brokerages lowered their target prices due to the company's weak performance in the March quarter. By 9:30 am, the stock was trading at ₹1,217.55 on the NSE, marking a 2.55% decrease from the previous session's close.

For the three months ending in March, Ipca Labs reported a 34.5% increase in revenue, reaching ₹2,033 crore compared to ₹1,512 crore in the same quarter of the previous fiscal year. However, the pharmaceutical company's net profit declined by 22.2%, falling to ₹59.6 crore from ₹76.6 crore in the corresponding period last year.

For the quarter ending March 31, 2024, the company posted a Consolidated Total Income of ₹2,051.93 crore. This represents a decrease of 1.13% from the previous quarter's Total Income of ₹2,075.31 crore but an increase of 32.55% compared to the Total Income of ₹1,548.02 crore in the same quarter last year. The company reported a net profit after tax of ₹2.91 crore for the latest quarter.

Motilal Oswal reduced its earnings estimates by 12% for FY25 and 14% for FY26, considering several factors:

1) A gradual increase from the re-launches of ANDAs in the US market,

2) A challenging outlook in the branded generic exports segment, and

3) A moderation in the growth outlook for acute therapies within the DF segment. The brokerage set a new target price of ₹1,140 per share while maintaining its neutral rating, implying a downside of approximately 9% compared to the previous close.

Nuvama Institutional Equities reduced its target price for Ipca Laboratories to ₹1,438 from the earlier target of ₹1,480. Despite this adjustment, the brokerage maintains a buy rating on the stock, citing the management's optimistic outlook on margin guidance.

Ipca Laboratories' management anticipates an 18% margin in FY25E, which is projected to increase to approximately 21% by FY27E. Over the next six to seven years, IPCA expects to achieve a 24-25% EBITDA margin, potentially resulting in a 20-25% compound annual growth rate (CAGR) in EBITDA.

Prabhudas Lilladher has issued a reduce call on Ipca Laboratories, setting a target price of ₹1,150. With the current market price at ₹1,249.65, this recommendation reflects a cautious outlook on the stock.

Over the past year, Ipca Labs shares have surged by 70%, significantly outperforming the benchmark Nifty 50 index, which has risen by 22% during the same period.

IPCA Laboratories Ltd (IPCA) is a manufacturer and supplier of active pharmaceutical ingredients (APIs) and formulations. The company manufactures various formulations and APIs for various therapeutic segments. It offers products for pain, rheumatology, antimalarials and hair care therapy.

IPCA has API manufacturing facilities located in Madhya Pradesh, Maharashtra, Gujarat, Andhra Pradesh, Sunderland, and North Carolina. It operates formulation facilities in Silvassa, Madhya Pradesh, Maharashtra, Uttaranchal, Sikkim and Gujarat among others. The company markets its products across the Americas, Africa, Asia, Australia, and Europe. IPCA is headquartered in Mumbai, Maharashtra, India.