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Prabhudas Lilladher Report
We believe Ipca Laboratories Ltd.'s earnings are likely to remain muted over FY21-23E impacted by high Covid base, weak margins and one time issues related to UK and export active pharma ingredient business, resulting in stock underperformance.
However, in our recent management interaction, Ipca highlighted that margins are likely to recover as revenues scale up with easing of certain overheads and raw material prices.
We expect 31% earning per share compound annual growth rate over FY23-25E versus 20% EPS decline over FY21-23E on back of strong domestic formulation business (45% of total sales), which continues to outperform India pharma market.
Additionally, export business is also on a gradual recovery mode with UK and export API business expected to normalise by Q4 FY23.
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