Emkay Global Financial Sees Upside in Ipca Laboratories, Sets Price Target at Rs 1800

Ipca Laboratories Exceeds Expectations in 4QFY26 EBITDA

Emkay Global Financial's research report on Ipca Laboratories reveals that the company's 4QFY26 EBITDA exceeded expectations, aligning with consensus estimates. The beat was primarily driven by higher overall sales, a marginally higher gross margin, and lower staff costs. Notably, the gross margin and EBITDA margin expansion, excluding Unichem, was significantly higher at approximately 330 basis points year-over-year.

Ipca's top-line growth was primarily driven by higher generic sales, with broad-based growth across markets. The management's commentary was positive, highlighting double-digit growth outlook across segments. The company expects consolidated sales growth of 12-13% in FY27, with 10% growth in Unichem's US portfolio. Additionally, Ipca expects a 22% consolidated EBITDA margin, with a 12-13% margin in Unichem.

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Despite concerns around potential volatility in Ipca's ex-India earnings, the consensus FY27 EPS estimate has remained remarkably stable over the last two years. Emkay Global Financial notes a sharp price-value disconnect emerging post-recent correction, even based on conservative estimates.

Outlook and Recommendations

The research firm broadly maintains its FY27/28 EPS estimates and rolls forward to Jun-28E earnings, introducing FY29 estimates. Emkay Global Financial retains its BUY rating and raises its target price (TP) to Rs1,800 from Rs1,700, a 6% increase.