- 30 May 2023
- ICICI Securities
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IPCA LABS' REVENUES IN LINE BUT SIGNIFICANT MISS IN MARGINS
IPCALAB - 1368 Change: -14.60 (-1.06 %)News: Revenues grew 17.3% YoY to Rs 1511.6 crore, mainly on the back of strong YoY growth across segments. It delivered 10.2% growth from domestic formulations at Rs 607.9 crore followed by Export formulations which grew 24.9% to Rs 432.6 crore. In exports, branded business grew 52.3% at Rs 156.4 crore, generics business grew 22.3% to Rs 200.5 crore. Institutional business de-grew 5.3% to Rs 75.8 crore. API sales increased 34.6% to Rs 347 crore. EBITDA declined 17.5% YoY to Rs 181 crore while EBITDA margins declined 504 bps to 12%. The rise in input costs dented margins. PAT declined 41.2% at Rs 76.5 crore.
Views: Dent in EBITDA margins was attributable to lower GPM and higher-than-expected other expenses. GPM was below par due to skewness towards low margin exports business and lower than estimated growth in the domestic business. With the proposed Unichem acquisition ( 2.25x FY23 sales) the path for margins could be even more challenging with the proportion of high margins domestic business is likely to come down from ~43% to ~35% of sales, besides an outgo of ~ | 1800 crore for acquisition. Unichem’s gross block of | 1200 crore is also mostly generic focused. Besides base business performance, progress on acquisition synergies would be keenly watched.
Impact: Neutral