Ipca Labs shares jump 7% after rating upgrade from HSBC

The brokerage firm expects the pharmaceutical company to witness notable margin expansion going forward on the back of healthy growth in focus markets which are India and the UK, along with easing cost pressure.

HSBC estimates the company’s build in earnings before interest, taxes, depreciation, and amortisation (EBITDA) improvement to be more than 470 basis points (bps), and the profit after tax (PAT) compound annual growth rate (CAGR) of 50% for financial years 2024-2026, adding the commencement of US supplies will serve as a major catalyst for these numbers.

It has also noted down a few key risks concerning Ipca Laboratories, which include a continued slowdown of volumes in the Indian market, along with the adverse developments in export markets, like currency depreciation and supply chain disruptions.

The company’s consolidated net profit rose sharply by 66.8% on a year-on-year (YoY) basis to ₹179.88 crore in the quarter ended December 31, 2023, compared to ₹107.84 crore in the same period last year, while net sales gained 32.8% to ₹2,052.86 crore in third quarter of FY24 versus ₹1,546 crore in the year-ago period.

Ipca Laboratories Ltd shares were trading 5.08% higher at ₹1,189.8 apiece on BSE at 12:37 pm.