Ipca posts muted revenues, margins trending lowIPCALAB - 1132 Change: 5.85 (0.52 %)
News: Revenues grew by 1.3% YoY to Rs 1586 crore mainly on back of strong YoY growth of 12% in domestic formulations to Rs 685 crore. Export formulations de-grew by 9% YoY to Rs 402 crore. In exports, branded business de-grew 14% YoY Rs 93 crore, Generics business de-grew 2% YoY Rs 212 crore and Institutional business de-grew 17% YoY Rs 97 crore. APIs sales declined by 9% YoY to Rs 375 crore. EBITDA margins declined 962 bps YoY to 17% (I-direct estimates of 20.8%) amid 164 bps YoY decline in Gross margins to 63.5% and higher other expenditure. Subsequently, EBITDA de-grew 35% YoY to Rs 270 crore. PAT de-grew 53% YoY to Rs 143 crore. Delta vis-à-vis EBITDA was mainly due to higher tax rate and depreciation.
View: Ipca Laboratories’ revenues were better than I-direct estimates but margins were a significant miss. Sequential decline of 343 bps in gross margins indicates company is facing higher inflation in raw material than anticipated, however EBITDA margins were flat QoQ due to better operating leverage. Ipca remains a decent player with judicious mix of strong domestic franchise and a spread out exports model with healthy balance sheet. Going ahead, with firm growth tempo in domestic formulations, good prospects both for API exports, formulation exports, we expect further improvement in financial parameters.