IPCA Laboratories: Company retains its revenue guidance for FY26

EBITDA (+10% YoY) was 2%/8% below our/consensus estimates, as 10% YoY sales growth (India grew 10% YoY, generics +19%) and higher gross margin  (GM) (+80 bps YoY) were offset by higher costs (staff/SG&A +11%/+16% YoY).

IPCA retains its guidance of 9-10% revenue growth but has marginally cut margin guidance to 75 bps YoY expansion from the earlier expectation of 100 bps expansion for its consolidated business, due to cost and price pressure in the Unichem business.

It retains its standalone margin guidance of 150 bps YoY expansion in FY26. While India growth in Q1FY26 was marginally lower at 10%, largely due to growth moderation in its CVS segment because of the reorganization of the field force to add two new divisions, it expects CVS growth to recover quickly and retains its guidance of outperforming IPM growth by 1.5x, driven by growth in key therapies, market share gains, and new launches.

We believe IPCA is well-positioned for growth (~11% CAGR over FY25-28E), led by steady growth in India (new launches, steady growth in focused therapies, and scale-up in chronic categories), ramp-up in export formulations (through Unichem integration and new launches in the EU/RoW), and gradual recovery in the API business, with improving margins (~17%/25% EBITDA/PAT CAGR over FY25-28E). Factoring in Q1 performance, we have tweaked EPS for FY26/27E and revised the target price (TP) to INR 1,720 (28x Q1FY28E EPS; cut multiple on tariff uncertainty). Maintain BUY.

 Disclaimer : This content is only for informational purpose. It does not make any recommendation to act or invest. The target price recommendation given  are general in nature and not specifically for you. They do not consider your unique risk tolerance and investment objectives.

 Source : HDFC Securities Institutional Equities

 Full Report : https://www.hdfcsec.com/hsl.docs/HSIE%20Results%20Daily%20–%2013%20Aug%2025%20-%20HSIE-202508130652556341486.pdf?t=138202565458815