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Better-than-expected adj. earnings; impairment drags reported PAT

* 4QFY25 sales grew 10.5% YoY to INR22.4b (our est: INR21.7b).

* Formulation sales grew 11% YoY to INR12.8b (57% of sales).

* Domestic formulation sales grew 10.8% YoY to INR7.6b (59% of formulation sales).

* Exports formulation sales grew 10.5% YoY to INR5.2b (41% of formulation sales). Exports (generics formulation) grew 7% YoY to INR2.5b (48% of export sales). Exports (branded formulation) grew 3% YoY to INR1.7b (32% of export sales). Exports (institutional sales) grew 36% YoY to INR1.1b.

* API sales grew 2% YoY to INR3.4b (15% of sales). Domestic API sales grew 18% YoY to INR906m (27% of API sales). Export API sales declined 3% YoY to INR2.5b (73% of API sales).

* Revenue from subsidiaries grew 16% YoY to INR6.1b (28% of sales). The revenue growth was largely due to Unichem.

* Gross margin (GM) expanded 220bp YoY to 68.5% due to superior product mix/lower RM cost.

* In line with gross margins, EBITDA margin expanded 330bp YoY to 19.1% (our est: 18.6%), on higher GM and better operating leverage (employee expense/other expenses down 60bp/40bp YoY as % of sales).

* EBITDA grew 33.2% YoY to INR4.2b (our est: INR4b).

* IPCA recorded an impairment on exposure to associate (INR1.2b) and on fair value of freehold land (INR860m).

* Adj. PAT grew 23.4% YoY to INR2.4b (our estimate: INR2.0b).

* Revenue/EBITDA/PAT grew 16%/32.1%/45% YoY in FY25 to INR89b/INR17b/INR9b

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