Ipca Laboratories (IPCLAB)

CMP: | 2040 Target: | 2290 (12%) Target Period: 12 months HOLD

May 31, 2021 Upbeat guidance, execution remains key Q4 revenues remained subdued growing just 3.8% YoY to | 1115 crore. Strong YoY growth of 19.7% in export formulations to | 338 crore was partly Particulars

offset by API sales decline of 5.5% YoY to | 260 crore. Domestic Particular Amount formulations remained flat at | 434 crore vs. | 431 crore in Q4FY20. EBITDA Market Capitalisation | 25873 crore margins improved 484 bps YoY to 20.5% due to better gross margins and Debt (FY21) | 267 crore

lower other expenditure. EBITDA grew 35.8% YoY to | 229 crore. PAT grew Cash (FY21) | 365 crore 87.5% YoY to | 161 crore (I-direct estimate: | 204 crore). Delta vis-à-vis EV | 25775 crore EBITDA was due to higher other income, lower depreciation and tax rate. 52 week H/L (|) 2456/1467 Equity capital | 25.4 crore Update Result Export formulations main catalyst for growth Face value | 2 Price performance Growth in export formulations (29% of FY21 revenues) was on the back of growth in both international generics and international branded 2500 14000 formulations. The international anti-malarial institutional business has also 12000 2000 contributed substantially to overall exports growth. US traction will take 10000 longer than earlier estimated due to USFDA import alerts for the Ratlam 1500 8000 facility that is the only API source for Silvassa and Pithampur formulations 1000 6000 plants along with Silvassa and Pithampur (Indore) plants that are specifically 4000 500 earmarked for the US business, besides third party sales. However, 2000 0 0 sustained traction from branded and generics exports sales with a revival in EU is expected to mitigate the US void. We expect export formulations to

Nov-18 Nov-19 Nov-20

May-19 May-20 May-21 grow at ~8% CAGR in FY21-23E to | 1859 crore, driven by generic May-18 formulation exports and recovery in the tender and branded exports. Ipca Labs (N.H.S) NSE500 (R.H.S)

Growth in ex-anti-malarials to counter antimalarial volatility Key risks to our call Domestic formulations comprise 37% of FY21 revenues. The domestic  Continued impact on domestic performance has been volatile at times due to presence of anti-malarials in anti-malarial/ anti-bacterial/ cough the portfolio. However, with incremental growth in other therapies, & cold segments especially non-communicable diseases like pain management, cardio-  Faster than expected resolution of diabetology, etc, the overall portfolio is poised for steady growth. We expect key plants by USFDA Indian formulations to grow at 14.4% FY21-23E CAGR to | 2592 crore. Research Equity Retail

– Valuation & Outlook

Q4 results were below I-direct estimates on all fronts with the company Research Analyst witnessing sequential sales decline across segments (excluding export branded generics). Quarterly performance gyrations notwithstanding, the Siddhant Khandekar [email protected] company remains a decent player with judicious mix of strong domestic franchise and a spread out exports model with healthy balance sheet. Mitesh Shah Though there are fluctuations in the institutional business, the management [email protected] Securities ICICI remains upbeat on prospects. Going ahead, with firm growth tempo in Sudarshan Agarwal domestic formulations, good prospects both for API exports, formulation [email protected] exports, we expect further improvement in financial parameters. Ipca will

continue to remain a compelling bet on the back of well-rounded growth prospects. At the current price, we believe the stock has factored in most of the upsides. Subsequently, we change from BUY to HOLD rating and arrive at our TP of | 2290 (earlier | 2490) based on 25x FY23E EPS of | 91.6. Key Financial Summary

(| crore) FY20 FY21 FY22E FY23E CAGR (FY21-23E) % Revenues 4648.7 5419.9 5907.3 6524.7 9.7 EBITDA 903.7 1544.3 1495.9 1699.1 4.9 EBITDA Margins (%) 19.4 28.5 25.3 26.0 Net Profit 603.4 1139.9 1101.7 1161.2 0.9 EPS (|) 47.6 89.9 86.9 91.6 PE (x) 42.9 22.7 23.5 22.3 EV to EBITDA (x) 28.7 16.4 16.6 14.1 RoNW (%) 16.6 24.2 19.1 16.8 RoCE (%) 17.6 27.1 21.9 21.6 Source: ICICI Direct Research; Company

Result Update | Ipca Laboratories ICICI Direct Research

Exhibit 1: Variance Analysis Q4FY21 Q4FY21E Q4FY20 Q3FY21 YoY (%) QoQ (%) Comments Sequential sharp decline amid decline in across key geographies Revenue 1,114.6 1,271.1 1,073.8 1,409.8 3.8 -20.9 and businesses Raw Material Expenses 338.6 444.9 364.6 515.4 -7.1 -34.3 Gross margins (%) 69.6 65.0 66.0 63.4 358 bps 618 bps Improved amid better product mix and prudent procurement Employee Expenses 257.6 260.6 242.2 245.1 6.4 5.1 Included forex loss of | 41.3 crore against profit of | 15.06 crore in Q4FY20. Decline also due to 1) | 13 crore of impairment for krebs 2) Other Expense 289.5 279.6 298.5 282.4 -3.0 2.5 higher repair amid maintenance cost by | 9 crore and 3) | 5-8 crore amid increased in freight cost Operating Profit (EBITDA) 228.8 286.0 168.5 366.9 35.8 -37.6 YoY improvement mainly due to lower marketing and travelling cost, EBITDA (%) 20.5 22.5 15.7 26.0 484 bps -550 bps which was partially offset by lower gross margins and removal of MEIS income of | 12 crore Interest 1.7 2.3 3.7 2.3 -53.7 -25.8 Depreciation 52.5 53.5 63.9 53.5 -17.9 -1.9 Other Income 19.9 15.9 13.7 15.4 45.1 29.5 PBT 194.5 246.1 114.6 326.5 69.8 -40.4 Tax 30.9 43.1 29.2 56.7 5.9 -45.5 Tax Rate (%) 15.9 17.5 25.5 17.4 -958 bps -148 bps Reported PAT 161.2 203.8 86.0 265.5 87.5 -39.3 YoY growth in-line with operational performance EPS (|) 12.7 16.1 6.8 20.9 87.5 -39.3 Key Metrics Sequential sharp decline amid lower sales in last 10 days of March Domestic formulations 433.6 474.1 431.0 523.2 0.6 -17.1 due to inventory destocking by client and lower MR productivity. HCQS revenues was | 20 crore against | 37 crore Export - Generic 160.8 190.9 166.0 215.1 -3.2 -25.3 Export - Institutional 76.2 91.3 39.7 138.6 91.9 -45.0 YoY growth mainly due to base effect Export - Branded 101.0 96.6 76.7 77.5 31.7 30.3 YoY growth mainly due to base effect API 259.9 324.6 275.1 352.1 -5.5 -26.2

Source: ICICI Direct Research Exhibit 2: Change in Estimates FY22E FY23E Comments (| Crore) Old New % Change Old New % Change Revenue 5,925.5 5,907.3 -0.3 6,517.5 6,524.7 0.1 EBITDA 1,513.2 1,495.9 -1.1 1,706.6 1,699.1 -0.4 EBITDA Margin (%) 25.5 25.3 -21 bps 26.2 26.0 -14 bps Changed as per management guidance Changed mainly due to change in margins expectations, lower other PAT 1,217.8 1,101.7 -9.5 1,262.4 1,161.2 -8.0 income and higher depreciation amid change in capex assumption

EPS (|) 96.0 86.9 -9.5 99.5 91.6 -8.0 Source: ICICI Direct Research Exhibit 3: Change in Estimates Current Earlier FY20 FY21 FY22E FY23E FY22E FY23E Domestic formulations 1,912.6 1,981.7 2,314.5 2,592.2 2,307.6 2,584.5 Export formulations 1,221.6 1,597.2 1,708.3 1,859.1 1,713.5 1,838.1 API 1,173.1 1,506.3 1,506.8 1,657.5 1,510.3 1,661.3 Source: ICICI Direct Research

ICICI Securities | Retail Research 2 Result Update | Ipca Laboratories ICICI Direct Research

Conference Call Highlights

 Domestic segment continued seeing impact in anti-malarial, anti- bacterial, cough-cold segments  Domestic business was impacted in Q4FY21 due to (a) 4% impact amid high base of HCQS related opportunities (| 37 crore in Q4FY20 vs | 20 crore in Q4FY21) (b) last 10 days impacted in March likely due to deferment of targets to FY22 by MRs  Pain & cardio growing; Pain - 9% up YoY; Cardio - up 6% YoY  CNS (up 11%), Derma (up 23%), Ophthalmic (up 61%) and Nutraceuticals (up 41%) also growing positively

 Price trends  While Sartan prices are down; in overall portfolio prices are up but no significant impact on Ipca due to medium term price contracts  Formulations – except Paracetamol and a couple of drugs no significant price increase for Ipca  Intermediates – One anti-malarial related molecule saw a significant price hike (a) Other intermediates (such as Metformin) saw a price hike of 15-18%  Solvents – price increase of 18-30% in some solvents (a) Methanol – up 45%; Methylene chloride – up 23%  Packaging materials (a) Aluminium foil – price up ~26%; Plastic resin – up 12- 30%; Paper – 5-18% up; and Glass also saw significant price increase

 April-May saw uptick in HCQS related opportunities in domestic space  Cough & Cold, anti-malarial also saw growth revival in the first two months

 FY21 exceptional opportunities were at | 365 crore  | 180 crore related to HCQS and chloroquine API  | 185 crore related to HCQS and chloroquine formulations

 Backward integration up at 61% of formulations in FY21 vs 56% in FY20

 Captive API business was at | 2195 crore in FY21  MRs are at ~ 4000. Some MRs (~200) to be added in CNS, Opthal and Derma in FY22

 Better gross margins in Q4FY21 amid superior product mix and check on raw material price

ICICI Securities | Retail Research 3 Result Update | Ipca Laboratories ICICI Direct Research

 Formulations capacity expansion not needed; API capacity utilisation at 90%  API expansion of 10-15% – Ratlam (additional capacity of 150 tonnes) may be available in Q2FY22; Dewas (additional capacity of 300 tons) likely in H2FY23E

 Guidance for FY22 – overall sales growth to be ~9-10%  Domestic – 16-18%; Exports Branded – 13-15%; Institutional – 5%; Generic – 5% (a) Domestic price growth in non-NLEM products to be ~5- 6%; NLEM products to be nearly nil  Domestic API – (28)% ; Export API – 10%; Overall API – 2%  EBITDA margins maintainable at 25-25.5% for FY22 (a) To improve 100-150 bps p.a.

 Capex for FY22 ~ | 550-600 crore  Dewas – | 250-280 crore  | 150-200 crore for maintenance  Rest to be done at Ratlam facility

 Subsidiaries  Onyx (UK) ~| 23 crore profit in FY21 from | 97 crore in sales; +30% EBITDA margins  Baysure (US) – Trading company, FY21: | 5.5 crore profit on sales of | 160 crore  Ramdev – Restructuring is being done, therefore utilisation was lower (a) Sales de-growth in FY21 and | 8 crore loss  Tropic wellness (nutraceutical marketing) – | 103 crore sales (| 85 crore in FY20); PAT at | 22 crore (vs | 15.5 crore in FY20) (a) Ipca’s share at 40%  Kreps (Vellore) – currently loss making amid capacity utilization issues

 Dewas work is delayed by 3-4 months due to Covid, non-availability of oxygen  Converted the building to Covid centre  Q3FY22, Q4FY22 to likely begin installation; then begin validation etc.

ICICI Securities | Retail Research 4 Result Update | Ipca Laboratories ICICI Direct Research

Exhibit 4: Quarterly Financials | Crore Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 YoY (%) QoQ (%) Revenues 875.4 1012.0 1006.1 879.6 1078.2 1283.9 1212.9 1073.8 1534.4 1361.1 1409.8 1114.6 3.8 -20.9 Raw Material Expenses 281.5 312.7 338.9 306.7 406.0 449.7 423.8 364.6 431.6 442.7 515.4 338.6 -7.1 -34.3 % of Revenue 32.2 30.9 33.7 34.9 37.7 35.0 34.9 34.0 28.1 32.5 36.6 30.4 -358bps -618bps Gross Profit 594.0 699.3 667.3 572.9 672.2 834.2 789.1 709.2 1102.8 918.4 894.4 776.0 9.4 -13.2 GPM (%) 67.8 69.1 66.3 65.1 62.3 65.0 65.1 66.0 71.9 67.5 63.4 69.6 358bps 618bps Employee Expenses 202.6 212.0 185.7 187.1 215.7 232.0 231.3 242.2 256.3 254.5 245.1 257.6 6.4 5.1 % of Revenue 23.1 20.9 18.5 21.3 20.0 18.1 19.1 22.6 16.7 18.7 17.4 23.1 56bps 573bps Other expense 272.5 313.7 247.1 222.2 259.4 337.6 284.1 298.5 258.1 303.7 282.4 289.5 -3.0 2.5 % of Revenue 31.1 31.0 24.6 25.3 24.1 26.3 23.4 27.8 16.8 22.3 20.0 26.0 -183bps 594bps Total Expenditure 756.6 838.4 771.7 716.0 881.1 1019.4 939.2 905.3 946.1 1000.9 1042.9 885.8 -2.2 -15.1 % of Revenue 86.4 82.8 76.7 81.4 81.7 79.4 77.4 84.3 61.7 73.5 74.0 79.5 -484bps 550bps EBIDTA 118.8 173.6 234.5 163.6 197.1 264.5 273.7 168.5 588.3 360.2 366.9 228.8 35.8 -37.6 EBIDTA Margin (%) 13.6 17.2 23.3 18.6 18.3 20.6 22.6 15.7 38.3 26.5 26.0 20.5 484bps -550bps Depreciation 46.6 45.4 45.7 44.8 46.1 49.6 50.8 63.9 51.0 52.1 53.5 52.5 -17.9 -1.9 Interest 4.9 2.4 5.1 6.4 4.6 4.2 4.0 3.7 2.7 2.3 2.3 1.7 -53.7 -25.8 Other Income 14.3 14.8 13.3 15.3 20.3 14.8 18.1 13.7 12.1 15.5 15.4 19.9 45.1 29.5 PBT 81.6 140.6 196.9 127.7 166.8 225.4 237.0 114.6 546.6 321.2 326.5 194.5 69.8 -40.4 Tax 13.1 22.1 37.4 31.7 37.4 31.9 36.9 29.2 99.9 52.6 56.7 30.9 5.9 -45.5 Tax Rate (%) 16.0 15.7 19.0 24.8 22.4 14.1 15.6 25.5 18.3 16.4 17.4 15.9 -958bps -148bps PAT 68.5 118.5 159.2 98.6 129.6 193.1 197.6 86.0 446.2 267.1 265.5 161.2 87.5 -39.3 PAT Margin (%) 7.8 11.7 15.8 11.2 12.0 15.0 16.3 8.0 29.1 19.6 18.8 14.5 646bps -436bps EPS (|) 5.4 9.3 12.6 7.8 10.2 15.2 15.6 6.8 35.2 21.1 20.9 12.7 87.5 -39.3 Source: ICICI Direct Research, Company

ICICI Securities | Retail Research 5 Result Update | Ipca Laboratories ICICI Direct Research

Company Background Established in 1949, Ipca is known for its dominance in the anti-malarial business. It has come a long way from being an anti-malarial player to a player offering a gamut of other therapeutic products.

Overall formulations to API ratio are 71:29. Further break-up of formulations- 1) domestic formulations- 37%, 2) export formulations-29% of total revenues. Further break-up of APIs- 1) Domestic APIs- 7%, 2) Export APIs-21% of total revenues.

Exports formulations are further divided into- 1) branded formulations- 25% of exports formulations, 2) generic formulations- 51% of exports formulations and 3) institutional business- 24% of exports formulations.

In domestic formulations, the company owns a field force of ~4000 MRs (as of FY21).

Major therapies in domestic formulations are-1) pain management 2) anti- malarial 3) cardiovascular (CVS) and 4) gastrointestinal (GI)

The company is awaiting resolution on the US formulations front with USFDA import alerts for three of its plants (Ratlam, Indore SEZ and Silvassa).

ICICI Securities | Retail Research 6 Result Update | Ipca Laboratories ICICI Direct Research

Exhibit 5: Revenues to grow at ~10% CAGR in FY21-23E Exhibit 6: India to grow at 14.4% CAGR over FY21-23E

7200.0 6525 3000.0 2592 6300.0 5907 5420 2500.0 2314 5400.0 4649 1913 1982 2000.0 4500.0 3773 1647 3211 3284 1379 1425

3600.0 2907 1500.0 1209

(| crore) (| (| crore) (| 2700.0 1000.0 1800.0 500.0 900.0 0.0 0.0 FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E Revenues Domestic Formulations

Source: ICICI Direct Research, Company Source: ICICI Direct Research, Company

Exhibit 7: Export to grow at 8% CAGR over FY21-23E Exhibit 8: EBITDA & EBITDA margins trend 1699 2000.0 1859 1800.0 32.0 1544 1496 1800.0 1708 1600.0 28.5 28.0 1597 25.3 26.0 1600.0 1400.0 19.4 24.0 1400.0 1222 1200.0 18.3 904 20.0 1200.0 996 994 1048 1000.0 13.8 918 13.9 16.0 1000.0 800.0 10.0 690 (%)

(| crore) (| 12.0

(| crore) (| 800.0 600.0 445 455 600.0 400.0 290 8.0 400.0 200.0 4.0 200.0 0.0 0.0 0.0 FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E Export Formulations EBITDA EBITDA Margins (%) Source: ICICI Direct Research, Company Source: ICICI Direct Research, Company

Exhibit 9: PAT & PAT margins trend Exhibit 10: RoE & RoCE trend 30.0 27.1 1400.0 24.0 1140 1102 1161 25.0 21.9 21.6 1200.0 21.0 20.0 1000.0 13.0 18.6 17.8 20.0 17.6 24.2 16.0 15.0 11.7 800.0 19.1 7.3 603 12.0 15.0

(%) 16.8 600.0 6.1 442 (%) 8.7 9.1 16.6

(| crore) (| 3.2 8.0 10.0 14.2 400.0 195 239 4.5 93 4.0 200.0 5.0 7.9 8.9 0.0 0.0 0.0 4.1 FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E

Net Profit Net Profit Margins (%) RoCE RoNW Source: ICICI Direct Research, Company Source: ICICI Direct Research, Company

Exhibit 11: Valuation Revenues Growth Adj. EPS Growth P/E EV/EBITDA RoNW RoCE (| crore) (%) (|) (%) (x) (X) (%) (%) FY20 4649 23.2 47.6 36.4 42.9 28.7 16.6 17.6 FY21 5420 16.6 89.9 88.9 22.7 16.4 24.2 27.1 FY22E 5907 9.0 86.9 -3.4 23.5 16.6 19.1 21.9 FY23E 6525 10.5 91.6 5.4 22.3 14.1 16.8 21.6 Source: ICICI Direct Research, Company Exhibit 12: Shareholding Pattern (in %) Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Promoter 46.1 46.1 46.1 46.3 46.3 Others 53.9 53.9 53.9 53.7 53.7 Source: ICICI Direct Research, Company

ICICI Securities | Retail Research 7 Result Update | Ipca Laboratories ICICI Direct Research

Financial Summary

Exhibit 13: Profit & Loss (| crore) Exhibit 14: Cash Flow Statement (| crore) (Year-end March) FY20 FY21 FY22E FY23E (Year-end March) FY20 FY21 FY22E FY23E Revenues 4,648.7 5,419.9 5,907.3 6,524.7 Profit after Tax 586.7 1,135.7 1,101.7 1,161.2 Growth (%) 23.2 16.6 9.0 10.5 Add: Depreciation 210.5 209.2 222.4 257.3 Raw Material Expenses 1,644.1 1,728.3 1,890.3 2,055.3 (Inc)/dec in Current Assets -415.5 -198.9 -358.5 -307.3 Employee Expenses 921.2 1,013.6 1,133.7 1,243.1 Inc/(dec) in CL and Provisions 152.0 -37.5 125.9 99.3 Other Expense 1,179.6 1,133.8 1,387.4 1,527.3 Others 30.7 -18.4 7.4 5.7 Total Operating Expenditure 3,745.0 3,875.6 4,411.5 4,825.6 CF from operating activities 564.3 1,090.1 1,098.8 1,216.2 EBITDA 903.7 1,544.3 1,495.9 1,699.1 (Inc)/dec in Fixed Assets -402.4 -359.0 -580.0 -250.0 Growth (%) 31.0 70.9 -3.1 13.6 (Inc)/dec in Investments -49.4 -81.1 -500.0 -800.0 Interest 16.5 9.0 7.4 5.7 Others -83.4 -160.1 -1.2 -1.2 Depreciation 210.5 209.2 222.4 257.3 CF from investing activities -535.2 -600.2 -1,081.2 -1,051.2 Other Income 67.0 62.8 82.7 131.1 Issue/(Buy back) of Equity 11.9 35.8 0.0 0.0 PBT after EO/Forex 743.7 1,388.9 1,348.8 1,567.2 Inc/(dec) in loan funds -6.3 -231.7 -50.0 -50.0 Total Tax 135.3 240.1 236.0 394.9 Dividend paid & dividend tax -121.7 -101.5 -27.5 -29.0 MI & Profit from associates -10.6 -6.6 -8.9 -8.9 Other -8.1 223.3 42.6 44.3 PAT 603.4 1,139.9 1,101.7 1,161.2 CF from financing activities -130.5 -305.8 -84.9 -84.7 Growth (%) 36.4 88.9 -3.4 5.4 Net Cash flow -101.4 184.2 -67.3 80.2 Adjusted PAT 603.4 1,139.9 1,101.7 1,161.2 Opening Cash 282.3 180.9 365.1 297.8 EPS 47.6 89.9 86.9 91.6 Closing Cash 180.9 365.1 297.8 378.0 EPS (Adjusted) 47.6 89.9 86.9 91.6 Free Cash Flow 161.9 731.2 518.8 966.2 Source: ICICI Direct Research Source: ICICI Direct Research

Exhibit 15: Balance Sheet (| crore) Exhibit 16: Key Ratios (Year-end March) FY20 FY21 FY22E FY23E (Year-end March) FY20 FY21 FY22E FY23E Equity Capital 25.3 25.4 25.4 25.4 Per share data (|) Reserve and Surplus 3,602.2 4,676.3 5,750.4 6,882.5 Adjusted EPS 47.6 89.9 86.9 91.6 Total Shareholders funds 3,627.5 4,701.7 5,775.8 6,907.9 BV per share 286.0 370.7 455.4 544.7 Total Debt 500.7 266.7 216.7 166.7 Dividend per share 7.7 9.9 11.8 13.0 Deferred Tax Liability 141.8 133.6 142.9 152.9 Operating Ratios (%) Minority Interest 13.63 14.5 16.0 17.6 Gross Profit Margins 64.6 68.1 68.0 68.5 LTP & Other LTL 34.5 40.7 43.6 46.6 EBITDA Margins 19.4 28.5 25.3 26.0 Total Liabilities 4,318.1 5,157.1 6,194.9 7,291.7 PAT Margins 13.0 21.0 18.6 17.8 Gross Block - Fixed Assets 2,981.1 3,171.7 3,371.7 3,901.7 Inventory days 103.9 107.4 103.7 103.7 Accumulated Depreciation 936.7 1,145.9 1,368.2 1,625.6 Debtor days 70.3 54.7 65.9 65.9 Net Block 2,044.4 2,025.8 2,003.5 2,276.2 Creditor days 47.9 44.9 47.9 47.9 Capital WIP 85.2 234.8 614.8 334.8 Asset Turnover 1.6 1.7 1.8 1.7 Total Fixed Assets 2,129.6 2,260.7 2,618.3 2,611.0 EBITDA conversion Rate 62.4 70.6 73.5 71.6 Goodwill on Consolidation 62.4 46.6 46.6 46.6 Return Ratios (%) Investments 309.6 505.3 1,005.3 1,805.3 RoE 16.6 24.2 19.1 16.8 LT L&A,Non Current Assets 140.8 212.7 227.6 243.5 RoCE 17.6 27.1 21.9 21.6 Inventory 1,323.1 1,594.8 1,679.1 1,854.6 RoIC 19.2 34.2 31.0 31.4 Debtors 895.2 811.8 1,067.0 1,178.5 Valuation Ratios (x) Loans and Advances 3.0 2.5 2.6 2.8 P/E 42.9 22.7 23.5 22.3 Other Current Assets 215.3 269.0 287.9 308.0 EV / EBITDA 28.7 16.4 16.6 14.1 Cash 180.9 365.1 297.8 378.0 EV / Net Sales 5.6 4.7 4.2 3.7 Total Current Assets 2,617.5 3,043.1 3,334.4 3,721.9 Market Cap / Sales 5.6 4.8 4.4 4.0 Creditors 609.9 666.2 775.0 856.0 Price to Book Value 7.1 5.5 4.5 3.7 Provisions 93.7 103.1 110.4 118.1 Solvency Ratios Other current libilities 238.1 141.9 151.8 162.5 Debt / EBITDA 0.6 0.2 0.1 0.1 Total Current Liabilities 941.7 911.2 1,037.2 1,136.5 Debt / Equity 0.1 0.1 0.0 0.0 Net Current Assets 1,675.8 2,131.9 2,297.2 2,585.4 Current Ratio 2.6 2.9 2.9 2.9 Application of Funds 4,318.1 5,157.1 6,194.9 7,291.7 Source: ICICI Direct Research Source: ICICI Direct Research

ICICI Securities | Retail Research 8 Result Update | Ipca Laboratories ICICI Direct Research

RATING RATIONALE ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Buy, Hold, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock

Buy: >15%; Hold: -5% to 15%; Reduce: -5% to -15%; Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC, Andheri (East) Mumbai – 400 093 [email protected]

ICICI Securities | Retail Research 9 Result Update | Ipca Laboratories ICICI Direct Research

ANALYST CERTIFICATION

I/We, Siddhant Khandekar, Inter CA, Mitesh Shah, (cleared all 3 levels of CFA), Sudarshan Agarwal, PGDM (Finance), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.

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