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IPCA Laboratories: Mixed Q2 with domestic growth being offset by drag in exports

News: Revenues grew 13.5% YoY to Rs.1544.4 crore (I-direct estimate: Rs.1591 crore). Strong YoY growth of 30.4% in domestic formulations to Rs.698.2 crore (I-direct estimate: Rs.621.2 crore) were offset by 3.7% YoY de-growth in export formulations to Rs.351 crore (I-direct estimate: Rs.404.5 crore) along with APIs sales decline of 5.6% YoY to Rs.359.7 crore (I-direct estimate: Rs.430.8 crore). EBITDA margins declined 279 bps YoY to 23.7% (I-direct estimates of 24.4%) due to lower gross margins (down 272 bps YoY). Subsequently, EBITDA grew 1.5% YoY to Rs.365.6 crore (I-direct estimate: Rs.388.9 crore). Delta vis-à-vis I-direct estimates was mainly due to lower than expected top-line performance and margins. PAT de-grew 6.3% YoY to Rs.250.2 crore (I-direct estimate: Rs.289.6 crore). Delta vis-à-vis EBITDA was mainly due to higher tax rate being partially offset by higher other income.

Views: Ipca Laboratories’ Q2FY22 results were marginally lower than I-direct estimates mainly due to lower than expected performance across all segments except for domestic formulations (significant beat). Quarterly performance gyrations notwithstanding, the company 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.