Range
Stop Loss
Target
IPCA Lab (NSE Cash) - BUY
490 - 484
447
560
Monthly Chart
Technical Evidences
Since September
2015, the stock has
corrected significantly from the high of `
887. During last month, the stock halted its
corrective move near 161.8% retracement
of the previous up leg.
At the mentioned support, the stock has
formed a ‘Upward Bar Reversal’ on
monthly charts.
This indicates reversal of the trend and
thus we are expecting upward retracement
of the corrective downmove.
The ‘Stochastic’ indicator on monthly
charts is in oversold zone and has given
positive crossover from its average.
Also, the ‘SuperTrend’ indicator on daily
charts is in ‘Buy’ mode, which support our
bullish view on the stock.
Thus, the stock can be bought from current
level to a decline up to `484 for a target
of `560 in coming three months. A stop
loss can be placed at ` 447.
Source: Falcon ( Chart time: 13:45 IST on 20/07/2016 )
July 20, 2016
Stock Info
IPCA Lab
Domestic formulations business - the cash cow: Ipca has been successful in
Sector
Pharmaceutical
changing its business focus to the high-margin chronic and lifestyle segments from the
low-margin anti-malarial segment. The chronic and lifestyle segments, comprising CVS,
Market cap
5846
anti-diabetics, pain-management, CNS and dermatology products, constitute more than
50% of the company’s domestic formulation sales. With an expected pick-up in sales in
FY2017, we expect the domestic formulation business to grow at a CAGR of 16.2% over
Beta
0.6
FY2016-18E.
Exports currently under pressure; should pickup only by FY2018: After the USFDA
52 week high/low
888/402
inspection at Ratlam, the company received certain inspection observations in Form 483,
consequent to which the company voluntarily decided to temporarily suspend API
Avg. Daily Volume
49,999
shipments from this manufacturing facility to the US markets until the issue gets resolved.
However, the 483 was converted into an import alert. The company’s Silvassa and Indore
Face Value (`)
2
facilities are also under import alert. These developments impacted FY2015 sales, while
FY2017/FY2018 should see some revival. We expect exports to grow at a CAGR of
15.0% over FY2016-18E.
Shareholding Pattern (%)
Outlook: We expect net sales to post a 15.6% CAGR to `3,799cr, and EPS to register a
36.5% CAGR to ` 19.7 over FY2016-18E. The company’s financials will be impacted by
the USFDA import alert on the Ratlam, Indore and Silvassa facilities. While the problems
Promoters
45.9
are likely to persist for a while, we expect a gradual pick-up in performance only by
FY2018. Still, given the valuations, we maintain our Buy rating.
MF / Banks / Indian Fls
19.8
Company
Revenue
OPM PAT EPS ROCE ROE
P/E
P/BV
(` cr)
(%)
(` cr)
(`)
(%)
(%)
(x)
(x)
FII / NRIs / OCBs
22.1
FY2017E
3,303
15.3
219
17.3
8.4
9.1
24.6
2.1
Indian Public / Others
12.2
FY2018E
3,799
15.3
248
19.7
8.8
16.8
21.7
2.0
July 20, 2016
Research Team Tel: 022 - 3935 7600
E-mail: [email protected]
Website: www.angelbroking.com
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Disclosure of Interest Statement
IPCA Lab
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
July 20, 2016