IPCA LAB - Result Analysis Q1 FY21

IPCA LAB - Result Analysis Q1 FY21

Total income from operations 1,534 Cr 

1,078 Cr (42.31%) YoY | 1,073 Cr (436.18%) QoQ 

Year ending revenue: 4,548 Cr Vs. 3,746 Cr (21.31%)

Net Profit of 445.8 Cr 

129.3 Cr (244.91%) YoY 83.05 Cr (136.83%) QoQ 

Year ending Net profit: 603 Cr Vs. 445 Cr (35.54%)

EPS (in Rs.) 35.24

10.24 YoY | 6.57 QoQ 

Year ending EPS: 47.73 Vs. 35.21

View: Strong result and above expectation. YoY revenue up and profit more than double in YoY and four times in QoQ. 

Business Updates & Highlights:

Q1FY21 EBITDA is around INR 594.4 Cr Vs. 210 Cr in Q1FY20 therefore up by 183% in YoY EBITDA margin in Q1FY21 was 38.4% Vs. 19.1% in Q1FY20. EBITDA margin is improved and its double in YoY.

India formulations income in Q1FY21 up 8% at INR 489.8 Cr Vs. 452.8 in Q1FY20.

Exports formulations income in Q1FY21 up by 89.3% at INR 462 Cr Vs. 244 Cr in Q1FY20.

Domestic APIs income in Q1FY21 up by 209% at INR 203 Cr Vs. 65.7 Cr in Q1FY20.

Exports APIs Income in Q1FY21 up by 33% at INR 310 Cr Vs. 233 Cr in Q1FY19.

Financial

ROE and ROCE is around 15% and 16% respectively and book value per share is around INR 287 and share is currently trading at 7.3x of its book value. Company is currently tradinStrg at annualized PE of around 22 which is very fair as per Industry benchmark. Promoter holding in the company is around 46.1% which is good and stable. FIIs and mutual fund hold around 12.4% and 22.8% respectively. Company is virtually debt free. 

Position: Share strong support price is INR 1990. Long term investor should continue with the company and any correction will give good opportunity to enter in SIP basis in long term.

Share View: Share price high 2,150 (52 week) and now 2,095. IPCA is fully integrated pharmaceuticals company with a strong thrust on exports. IPCA is vertically integrated and produces finished dosage forms (FDFs) and Active Pharmaceuticals ingredients (APIs).

Opportunities

Strong APIs business growth in YoY in domestic as well as exports income. pca produces over 80 APIs at 12 production facilities. Manufacturing leadership extends across Atenolol (anti-hypertensive), Chloroquine Phosphate (anti-malarial), Chlorthalidone (diuretic), Furosemide (diuretic), Hydroxychloroquine Sulphate (DMARD), Losartan (anti-hypertensive), Metoprolol Succinate (anti-hypertensive), Metoprolol Tartrate (anti-hypertensive), Pyrantel Salts (anthelmintic), and Propranolol (anti-hypertensive) – besides being one of the largest suppliers of these APIs worldwide. Exports formulation Income which contributes nearly 30% of topline grew by 89% in YoY. Ipca manufactures over 350 formulations in almost every dosage form with 4 of branded formulations being ranked amongst the top 300 brands of Indian Pharma Market as per IQVIA May 2020. Leaders in Pain, Rheumatology, Antimalarials and Haircare therapies with a steadily growing portfolio. Strong operating cash flow in every quarter. 

Risk

Last 5 years topline growth was less than 5% and profit growth was also negative. Return on equity was also too less as compare to other pharma companies. 

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

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