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Target: ₹1,000
CMP: ₹849.75
We met with the management of Ipca recently to understand its business outlook. Domestic formulation (DF) is the key driver of its sales growth. The management expects the DF business to grow at 22-23 per cent y-o-y (adjusted for higher base of FY22) in FY23, propelled by growth across all therapies — mainly pain management, anti-diabetes, dermatology and urology.
The efforts are on track to generate ₹1,000 crore annual sales from Zerodol brand franchise through increased medical representative (MR) force and wider doctor reach. This along with superior traction in other brands such as Pacimol/Tfct Nib would sustain better-than-industry growth in pain management.
The enhanced focus on the cosmetics aspects in dermatology would drive 25 per cent y-o-y growth for Ipca v/s industry growth of 9-10 per cent over the next 12-18 months.
Notwithstanding the near-term hiccups in API segment, Ipca is building levers to almost double its API exports by FY27E. The exports (branded/generics) formulation sales is likely to revive from FY24. We have reduced our earnings estimate for FY23/FY24 by 4 per cent/3 per cent to factor in increased opex on the back of promotional activities and logistics cost.
After two years of earnings decline, we expect Ipca to clock 33 per cent earnings CAGR over FY23-25.
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