Ipca Laboratories reports 47.1% CAPEX growth while 4.2% Revenue decline
30-05-2015 • About Ipca Laboratories (
$IPCALAB) • By InTwits
Ipca Laboratories reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Ipca Laboratories is a company in decline: FY2015 revenue growth was -4.2%, 5 years revenue CAGR was -3.8%
- Ipca Laboratories has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.8%. At the same time it's in pair with industry average of 10.2%.
- CAPEX is quite volatile: 5,583 in FY2015, 3,796 in FY2014, 2,294 in FY2013, 2,605 in FY2012, 1,950 in FY2011
- The company has highly profitable business model: ROIC is at 12.6%
- It operates with high leverage: Net Debt/EBITDA is 1.3x while industry average is 1.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Ipca Laboratories ($IPCALAB) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 18,998 | 23,306 | 27,738 | 32,818 | 31,444 | -4.2% |
| SG&A | | | | | 1,415 | |
| EBITDA | 3,807 | 5,200 | 6,265 | 8,141 | 5,549 | -31.8% |
| Net Income | 2,623 | 2,771 | 3,236 | 4,785 | 2,542 | -46.9% |
Balance Sheet
|
|---|
| Cash | 104 | 107 | 567 | 743 | 1,248 | 68.1% |
| Short Term Debt | 3,024 | 2,709 | 2,508 | 3,086 | 3,254 | 5.4% |
| Long Term Debt | 2,675 | 3,302 | 3,662 | 2,940 | 5,032 | 71.2% |
Cash flow
|
|---|
| Capex | 1,950 | 2,605 | 2,294 | 3,796 | 5,583 | 47.1% |
Ratios
|
|---|
| Revenue growth | -50.2% | 22.7% | 19.0% | 18.3% | -4.2% | |
| EBITDA growth | 13.7% | 36.6% | 20.5% | 29.9% | -31.8% | |
| EBITDA Margin | 20.0% | 22.3% | 22.6% | 24.8% | 17.6% | -7.2% |
| Net Income Margin | 13.8% | 11.9% | 11.7% | 14.6% | 8.1% | -6.5% |
| SG&A, % of revenue | | | | | 4.5% | 4.5% |
| CAPEX, % of revenue | 10.3% | 11.2% | 8.3% | 11.6% | 17.8% | 6.2% |
| ROIC | 20.5% | 24.7% | 25.4% | 28.3% | 12.6% | -15.7% |
| ROE | 27.4% | 24.0% | 23.0% | 27.2% | 12.2% | -15.0% |
| Net Debt/EBITDA | 1.5x | 1.1x | 0.9x | 0.6x | 1.3x | 0.6x |
Revenue and profitability
Ipca Laboratories's Revenue decreased on 4.2% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 7.2 pp from 24.8% to 17.6% in FY2015.
Net Income marign decreased on 6.5 pp from 14.6% to 8.1% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 17.8% in FY2015. The company's CAPEX/Revenue increased on 6.6 pp from 11.2% in FY2012 to 17.8% in FY2015. It's average level of CAPEX/Revenue for the last three years was 12.5%.Ipca Laboratories has spent a lot to CAPEX (101% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at good ROIC (12.63%) and ROE (12.20%). ROIC dropped on 15.7 pp from 28.3% to 12.6% in FY2015. ROE dropped on 15.0 pp from 27.2% to 12.2% in FY2015.
Leverage (Debt)
Debt level is 1.3x Net Debt / EBITDA and 1.5x Debt / EBITDA. Net Debt / EBITDA surged on 0.6x from 0.6x to 1.3x in FY2015. Debt surged on 37.5% in FY2015 while cash jumped on 68.1% in FY2015.
Management team
Ipca Laboratories's CEO is Premchand Godha. Premchand Godha has 35 years tenure at the company. The company's CFO Ajit Kumar Jain has spent 24 years at the company.
Appendix 1: Peers in Pharmaceuticals
Below you can find Ipca Laboratories benchmarking vs. other companies in Pharmaceuticals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mangalam Drugs & Organics ($MANGALAM) | | 16.6% | -18.2% | -2.1% | 79.8% |
| Sun Pharmaceutical Industries ($SUNPHARMA) | | 39.9% | 40.4% | 42.4% | 70.2% |
| Marksans Pharma ($MARKSANS) | | 16.7% | 23.3% | 43.3% | 26.8% |
| Torrent Cables ($TORRCABS) | | 27.5% | 17.4% | -42.9% | 26.5% |
| Lincoln Pharmaceuticals ($LINCOPH) | | 6.3% | 3.8% | 8.5% | 25.9% |
| |
|---|
| Median (37 companies) | -16.1% | 16.6% | 14.7% | 12.6% | 10.4% |
|---|
| Ipca Laboratories ($IPCALAB) | | 22.7% | 19.0% | 18.3% | -4.2% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | | | 52.1% | 57.4% | 57.6% |
| Omega Laboratories ($OMEGALAB) | | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (2 companies) | | 46.9% | 26.1% | 28.7% | 28.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Divi'S Laboratories ($DIVISLAB) | 38.1% | 37.2% | 38.2% | 40.2% | 37.4% |
| Hester Biosciences ($HESTERBIO) | | | | | 32.9% |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 34.3% | 40.8% | 44.3% | 44.9% | 29.2% |
| Natco Pharma ($NATCOPHARM) | 21.3% | 21.5% | 23.2% | 24.9% | 26.2% |
| Dr.Reddy'S Laboratories ($DRREDDY) | 21.7% | 25.8% | 22.9% | 25.1% | 23.2% |
| |
|---|
| Median (46 companies) | 16.2% | 12.7% | 12.8% | 14.3% | 13.0% |
|---|
| Ipca Laboratories ($IPCALAB) | 20.0% | 22.3% | 22.6% | 24.8% | 17.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Claris Lifesciences ($CLARIS) | 32.5% | 58.1% | 42.9% | | 103.1% |
| Wintac ($WINTAC) | | | | | 22.8% |
| Hester Biosciences ($HESTERBIO) | | | | | 21.5% |
| Natco Pharma ($NATCOPHARM) | 20.0% | 24.4% | 16.3% | 14.4% | 14.1% |
| Granules India ($GRANULES) | 5.3% | 8.8% | 15.2% | 24.3% | 11.4% |
| |
|---|
| Median (30 companies) | 7.3% | 7.7% | 7.5% | 5.7% | 6.1% |
|---|
| Ipca Laboratories ($IPCALAB) | 10.3% | 11.2% | 8.3% | 11.6% | 17.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Marksans Pharma ($MARKSANS) | -25.8% | -142.4% | 34.9% | 33.8% | 41.2% |
| Alembic Pharmaceuticals ($APLLTD) | | 27.5% | 29.1% | 41.5% | 35.7% |
| Jenburkt Pharmaceuticals ($JENBURPH) | 43.6% | 34.1% | 29.0% | 32.4% | 35.3% |
| Abbott India ($ABBOTINDIA) | 36.0% | 29.6% | 26.9% | 30.5% | 34.2% |
| Divi'S Laboratories ($DIVISLAB) | 25.6% | 30.6% | 30.4% | 32.3% | 30.5% |
| |
|---|
| Median (53 companies) | 13.5% | 13.7% | 13.2% | 14.4% | 14.1% |
|---|
| Ipca Laboratories ($IPCALAB) | 20.5% | 24.7% | 25.4% | 28.3% | 12.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jubilant Life Sciences Limited ($JUBILANT) | 5.3x | 4.0x | 3.5x | 3.5x | 6.4x |
| Shasun Pharmaceuticals ($SHASUNPHAR) | 4.5x | 2.8x | 4.5x | 6.0x | 6.2x |
| Claris Lifesciences ($CLARIS) | 1.5x | 1.9x | 1.1x | 1.8x | 3.2x |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 3.7x | 3.6x | 2.6x | 2.3x | 2.9x |
| Neuland Laboratories ($NEULANDLAB) | 4.9x | 4.2x | 3.5x | 2.6x | 2.6x |
| |
|---|
| Median (42 companies) | 1.6x | 1.6x | 1.4x | 0.3x | 0.6x |
|---|
| Ipca Laboratories ($IPCALAB) | 1.5x | 1.1x | 0.9x | 0.6x | 1.3x |
