IPCAs Q4 results were mixed, with revenue/Ebitda 7-6% lower than our estimate and adjusted PAT 11% above estimate due to higher other income and lower taxes. Revenue grew 12% led by strong growth in branded generic exports (up 30%) and institutional malaria (up 21%) while India (up 10%) and API (up 2%) were lacklustre.
Ebitda margin continues to sustain momentum (up 310bps y-o-y) due to better mix. Management expects 18-20% growth in revenue and sustainable margins of 24% in FY15, imbibing confidence from strong revival in India, scale-up in the Indore SEZ and momentum in branded exports (23-30%). Over next fiscal, we see multiple triggers suchas AMFM tender announcement, product approvals in US, data from 505b (2) Phase-I trials and subsequent filing of Artesunate injectibles, which would improve visibility. We believe the current valuations at 13x FY16E EPS are attractive and maintain Buy with TP of Rs 975 (16x FY16E EPS).
Given full API integration, the company would benefit in price bidding and likely qualify for Tier-I/II. We forecast 21% earnings CAGR over FY14-16 building in growth revival in India, ramp-up in the US and robust growth across other markets. The current valuations at 13x FY16E EPS are attractive.