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Growth guidance intact

IPCA reported strong EBITDA of INR 6.7bn (up 21% YoY), in line with our estimates. Company has maintained revenue growth of 14-16% and OPM at 23% in FY27E with 100-125bps improvement annually. Our FY28E and FY29E EPS stand increased by 2- ~5% which factors in 15% revenue growth in FY27. Domestic formulation and branded generic business, which now contributes 46% of revenues and ~70% of EBITDA, continued to outperform and grow at healthy levels. We believe 1) recovery in API segment 2) higher margins ex Unichem 3) steady growth in domestic formulation are the key growth drivers. At CMP, the stock is trading at 17x EV/EBITDA and 26.5x PE on Sept 2028E adjusted for Unichem stake. We maintain our “Buy” rating on stock with revised TP of INR 2,200/share; valuing at 30x P/E on Sept 2028E.

Improved revenue trajectory YoY:

IPCA’s revenues came in at INR 29.1bn, up 14% YoY. We est INR 28.3bn. Ex Unichem, revenues grew by 15% YoY. Domestic formulations growth was 14% YoY. Export formulation was up 32.5% YoY at INR 6.5bn above our est. Branded business was up by 19% YoY while generic business was up 36% YoY. Institutional business was up 45% YoY to INR 1.5bn. API business delivered sales growth up 6% YoY at INR 4.3bn. Export API declined 7% YoY whereas domestic API was up 56% YoY. Revenues from subsidiaries was at INR 6.5bn.

In line EBITDA, Consol margins at 23%:

Consolidated gross margins improved 260bps YoY and 63bps QoQ to 72%. There was forex gain to the tune of INR 52mn booked under other expenses. Adj for forex; other expenses were up 19% YoY. Staff cost was up 21% YoY. EBITDA adj for forex gain came in at INR 6.7bn, up 21% YoY; in line with our est. Consol OPM came in at 23%, up 130bps YoY. Unichem margins at 11.6% (up 20bps YoY and 50bps QoQ). Adj for Unichem; EBITDA growth was at 22% YoY; to INR 5.94bn. GMs of 76.1% and 26.4% OPM. Adj PAT for forex came at INR 3.9bn with EPS of INR 15.5/share.

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