Emkay Global Financial Services raised its target price for IPCA Laboratories to Rs 1,800 from Rs 1,700, implying an upside of 21% from the current market price. The brokerage house maintained its ‘Buy’ rating on the stock. The change in price target came on the back of strong Q4 earnings, higher growth outlook, expected margin expansion, and many other factors.
Strong Q4FY26 earnings
IPCA’s EBITDA for the fourth quarter exceeded expectations, driven by higher overall sales, a marginally higher gross margin, and lower-than-anticipated staff costs. Specifically, generic sales growth was a significant contributor, rising 39% year-over-year (YoY), which was meaningfully ahead of analysts’ expectations.
Positive growth outlook
Management provided positive commentary across all segments, projecting consolidated sales growth of 12–13% for FY27. This includes an expected 10% growth in Unichem’s US portfolio as it begins to regain market share.
Anticipated margin expansion
Emkay expects consolidated EBITDA margins to reach approximately 22%. This expansion is supported by operating leverage gains in the standalone business, where domestic growth remains a volume-led play. Also, it will be aided by margin improvements in Unichem following the closure of its Ireland facility and the shift of production to India.
Robust product launch pipeline
The company maintains a healthy launch pipeline for FY27, with plans to introduce 6–8 additional products in the US through IPCA and 5–6 products through Unichem. Furthermore, the company plans to launch 3–4 products per market in Europe and other generic regions.
Emerging price-value disconnect
Emkay Global noted a “sharp price-value disconnect” emerging after a recent stock price correction. The brokerage believes the stock is undervalued relative to its growth potential, even when using conservative consolidated EBITDA margin expansion assumptions.
IPCA Laboratories’ share price performance
The share price of IPCA Laboratories has fallen 4% in the last five trading sessions. The stock has declined 1.4% in the past one month and has risen 4.5% in the last six months. IPCA Laboratories’ stock price moved up almost 8% over the previous 12 months.
IPCA Laboratories Q4FY26
The company’s consolidated net profit surged to Rs 299.07 crore in the fourth quarter of FY26.
Its revenue for the quarter rose 6.3% year-on-year to Rs 2,388.5 crore, while EBITDA increased 12.7% to Rs 484 crore. Operating margin improved to 20.2% from 19% in the corresponding quarter last year.
Also, the Board proposed a dividend of Rs 6 per share of face value Rs 1 each for FY26.