[T.S.R:16129] IPCA Labs-BUY

Q2FY11 results. Ipca reported good Q2FY11 figures with yoy growths of 20.5% in revenue and 13.1% in adjusted net profit. Net profit growth was lower owing to the 90-bp drop in EBITDA margin. (Q2FY10 had a high 23.7% margin owing to favourable currency movements.) n        Domestic formulations - key driver. Indian formulations grew exceptionally well at 29.4% yoy (contributing ~40% of revenue) fuelled by growth in most therapeutic areas. The anti-malarial segment saw a 41% rise owing to substantial increase in the incidence of malaria in most of the country. n        Exports formulations - scaling up. This segment grew 27.1% yoy (~30% of sales) led by Ipca's continuing efforts to expand into new areas, increase the number of products and >100% growth in supplies to tenders for anti-malarial products. Approval for the Indore SEZ plant from UKMHRA is expected by end-Q3FY11 and from USFDA by end-Q4FY11. n        Outlook. We expect the growth momentum to continue, driven by higher-than-industry growth in domestic formulations, continuous expansion in export formulations and expecting better API business in H2FY11. We thus maintain our estimates. n        Valuation. At CMP, Ipca trades at 14.8x FY11e and 11.7x FY12e earnings. We retain our target price of `356 and re-iterate Buy. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. FOR FULL REPORT VISIT THE LINK BELOW :  http://groups.google.com/group/stockresearcher/browse_thread/thread/3f47fcd35f89341d?hl=en-GB

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