HDFC Securities Chooses Ipca Labs as 'Pick of the Week' With a Target of ₹1,647

Mumbai, 18 January 2026: HDFC Securities has identified Ipca Laboratories Ltd (NSE: IPCALAB) as its investment ‘Pick of the Week’, assigning a base case target price of ₹1,647, implying a potential upside from current levels. The brokerage’s recommendation is underpinned by a 16% compound annual growth rate (CAGR) forecast for the pharmaceutical major’s earnings, driven by strong domestic performance and an anticipated revival in its US business following recent regulatory clearances.

Ipca’s Q2 FY26 Results Show 23% PAT Growth on Robust Domestic and API Sales

The company reported a strong second quarter, with revenue increasing 8.6% year-on-year (YoY) to ₹2,557 crore. Profit after tax (PAT) saw a sharper rise of 23% YoY to ₹283 crore, supported by a 210-basis-point expansion in operating margin to 20.9%. This performance was led by an 8% growth in India’s formulation sales and a standout 28% surge in Active Pharmaceutical Ingredient (API) revenues, which offset a decline in international formulation sales.

Regulatory Clearance for US Plants Paves Way for Export Business Revival

A key trigger for the positive outlook is the resolution of longstanding regulatory overhangs. In FY24, the US Food and Drug Administration (US FDA) cleared three of Ipca’s manufacturing facilities that had been under an import alert since 2015. This clearance is expected to allow the company to relaunch products and file new applications, potentially reviving its US generics business meaningfully from FY27. The company has 33 finally approved ANDAs and plans phased launches over the next 18-24 months.

Acquisition of Unichem Labs to Drive Synergies and Boost Export Footprint

The August 2023 acquisition of a 52.65% stake in Unichem Laboratories is seen as a strategic catalyst. HDFC Securities expects synergies from cross-selling portfolios, optimising procurement, and leveraging Unichem’s established US network for Ipca’s product launches. This integration is projected to improve Unichem’s margins and provide a significant tailwind for Ipca’s overall export business, which contributes 20% to total revenue.

Domestic Formulations Remain Core Engine With 12% Expected CAGR

Ipca’s domestic formulation business, contributing 39% of total sales, is the primary growth driver. The segment has consistently outperformed the Indian Pharmaceutical Market (IPM), growing at a 13-14% CAGR over the past five years. This is attributed to strong brands in pain management, cardiac, and anti-diabetic therapies, with its flagship brand Zerodol crossing ₹1,000 crore in annual sales. The brokerage forecasts a 12% sales CAGR for this segment through FY28.

Source: HDFC Securities Pick of the Week Report, 18 January 2026

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