Ipca Laboratories Net Income dropped on 63.3% and Revenue decreased on 8.2%
30-05-2016 • About Ipca Laboratories (
$IPCALAB) • By InTwits
Ipca Laboratories reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Ipca Laboratories has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.5%. At the same time it's a lot of higher than industry average of 7.4%.
- CAPEX is quite volatile: ₹2,473m in FY2016, ₹5,583m in FY2015, ₹3,796m in FY2014, ₹2,294m in FY2013, ₹2,605m in FY2012
- The company has potentially unprofitable business model: ROIC is 5.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.2x while industry average is -0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ipca Laboratories's Revenue decreased on 8.2%. Revenue decline was accelerating on average at -8.5 pp per annum in the last 5 years. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 5.2 pp from 17.6% to 12.4% in FY2016. During the last 5 years EBITDA Margin topped in FY2014 at 24.8% and was declining since that time.
SG&A as a % of Revenue showed almost no change in FY2016.
Net Income margin decreased on 4.9 pp from 8.1% to 3.2% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 8.6%. CAPEX/Revenue showed almost no change from FY2013 to FY2016. It's average CAPEX/Revenue for the last three years was 12.6%. Battling declining revenue Ipca Laboratories invested a large share of EBITDA (69.1%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (5.9%) and ROE (4.2%). ROIC decreased on 6.7 pp from 12.6% to 5.9% in FY2016. ROE decreased on 8.0 pp from 12.2% to 4.2% in FY2016. During the last 5 years ROIC topped in FY2014 at 28.3% and was declining since that time.
Leverage (Debt)
Debt level is 1.2x Net Debt / EBITDA and 1.7x Debt / EBITDA. Net Debt / EBITDA decreased on 0.1x from 1.3x to 1.2x in FY2016. Debt dropped on 27.0% while cash surged on 41.0%.
Ipca Laboratories has no short term refinancing risk: cash is higher than short term debt (151.1%).
Valuation and dividends
Ipca Laboratories's trades at EV/EBITDA 16.3x and P/E 57.8x while industy averages are 17.8x and 21.9x. Ipca Laboratories's EV/(EBITDA-CAPEX) is 52.6x with the industry average at 22.8x.
Management team
Ipca Laboratories's CEO is Premchand Godha. Premchand Godha has 37 years tenure with the company. Ipca Laboratories's CFO is Ajit Kumar Jain. Ajit Kumar Jain has 26 years tenure at the company.
Financial and operational results
Ipca Laboratories ($IPCALAB) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 23,306 | 27,738 | 32,818 | 31,444 | 28,850 | -8.2% |
| SG&A | | | | 1,415 | 1,388 | -1.9% |
| EBITDA | 5,200 | 6,265 | 8,141 | 5,549 | 3,579 | -35.5% |
| Net Income | 2,771 | 3,236 | 4,785 | 2,542 | 933 | -63.3% |
Balance Sheet
|
|---|
| Cash | 107 | 567 | 743 | 1,248 | 1,760 | 41.0% |
| Short Term Debt | 2,709 | 2,508 | 3,086 | 3,254 | 1,165 | -64.2% |
| Long Term Debt | 3,302 | 3,662 | 2,940 | 5,032 | 4,883 | -3.0% |
Cash flow
|
|---|
| Capex | 2,605 | 2,294 | 3,796 | 5,583 | 2,473 | -55.7% |
Ratios
|
|---|
| Revenue growth | 22.7% | 19.0% | 18.3% | -4.2% | -8.2% | |
| EBITDA growth | 36.6% | 20.5% | 29.9% | -31.8% | -35.5% | |
|
|---|
| EBITDA Margin | 22.3% | 22.6% | 24.8% | 17.6% | 12.4% | -5.2% |
| SG&A, % of revenue | | | | 4.5% | 4.8% | 0.3% |
| Net Income Margin | 11.9% | 11.7% | 14.6% | 8.1% | 3.2% | -4.9% |
| CAPEX, % of revenue | 11.2% | 8.3% | 11.6% | 17.8% | 8.6% | -9.2% |
|
|---|
| ROIC | 24.7% | 25.4% | 28.3% | 12.6% | 5.9% | -6.7% |
| ROE | 24.0% | 23.0% | 27.2% | 12.2% | 4.2% | -8.0% |
| Net Debt/EBITDA | 1.1x | 0.9x | 0.6x | 1.3x | 1.2x | -0.1x |
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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | - | 3.7% | 22.6% | 10.4% | 53.1% |
| Lincoln Pharmaceuticals ($LINCOPH) | - | 3.8% | 8.5% | 25.9% | 50.4% |
| Torrent Pharmaceuticals ($TORNTPHARM) | - | 17.7% | 32.2% | 13.6% | 42.4% |
| Natco Pharma ($NATCOPHARM) | - | 26.1% | 11.9% | 11.7% | 38.3% |
| Mangalam Drugs & Organics ($MANGALAM) | - | -18.2% | -2.1% | 79.8% | 33.7% |
| |
|---|
| Median (33 companies) | 27.7% | 14.7% | 12.6% | 9.2% | 11.4% |
|---|
| Ipca Laboratories ($IPCALAB) | - | 19.0% | 18.3% | -4.2% | -8.2% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | - | 52.1% | 57.4% | 57.6% | 59.6% |
| Omega Laboratories ($OMEGALAB) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (2 companies) | 46.9% | 26.1% | 28.7% | 28.8% | 29.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Divi'S Laboratories ($DIVISLAB) | 37.2% | 38.2% | 40.2% | 37.4% | 37.5% |
| Hester Biosciences ($HESTERBIO) | - | - | - | 32.9% | - |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 40.8% | 44.3% | 44.9% | 29.2% | 30.6% |
| Natco Pharma ($NATCOPHARM) | 21.5% | 23.2% | 24.9% | 26.2% | 24.1% |
| Dr.Reddy'S Laboratories ($DRREDDY) | 25.8% | 22.9% | 25.1% | 23.2% | 25.8% |
| |
|---|
| Median (53 companies) | 12.7% | 12.8% | 14.3% | 12.0% | 16.1% |
|---|
| Ipca Laboratories ($IPCALAB) | 22.3% | 22.6% | 24.8% | 17.6% | 12.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| J.B.Chemicals & Pharmaceuticals ($JBCHEPHARM) | 10.0% | 5.8% | 6.0% | 6.2% | 15.9% |
| Claris Lifesciences ($CLARIS) | 58.1% | 42.9% | - | 103.1% | 15.8% |
| Marksans Pharma ($MARKSANS) | 1.5% | 1.5% | 0.8% | 4.6% | 14.8% |
| Natco Pharma ($NATCOPHARM) | 24.4% | 16.3% | 14.4% | 14.1% | 13.8% |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 8.9% | 7.5% | 5.7% | 8.6% | 12.2% |
| |
|---|
| Median (26 companies) | 7.7% | 7.5% | 5.7% | 6.0% | 8.2% |
|---|
| Ipca Laboratories ($IPCALAB) | 11.2% | 8.3% | 11.6% | 17.8% | 8.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | 27.5% | 29.1% | 41.5% | 35.7% | 62.1% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 26.4% | 30.5% | 33.2% | 19.7% | 44.2% |
| Abbott India ($ABBOTINDIA) | 29.6% | 26.9% | 30.5% | 34.2% | 34.1% |
| Divi'S Laboratories ($DIVISLAB) | 30.6% | 30.4% | 32.3% | 30.5% | 31.9% |
| Jenburkt Pharmaceuticals ($JENBURPH) | 34.1% | 29.0% | 32.4% | 35.3% | 31.4% |
| |
|---|
| Median (56 companies) | 13.7% | 13.0% | 14.4% | 13.3% | 16.7% |
|---|
| Ipca Laboratories ($IPCALAB) | 24.7% | 25.4% | 28.3% | 12.6% | 5.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jubilant Life Sciences Limited ($JUBILANT) | 4.0x | 3.5x | 3.5x | 6.4x | 3.2x |
| Claris Lifesciences ($CLARIS) | 1.9x | 1.1x | 1.8x | 3.2x | 2.9x |
| Themis Medicare ($THEMISMED) | - | 7.9x | 0.0x | 0.0x | 2.9x |
| Glenmark Pharmaceuticals ($GLENMARK) | 2.7x | 2.1x | 2.2x | 2.5x | 2.2x |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 3.6x | 2.6x | 2.3x | 2.9x | 2.1x |
| |
|---|
| Median (40 companies) | 1.7x | 1.5x | 0.2x | 0.0x | 0.1x |
|---|
| Ipca Laboratories ($IPCALAB) | 1.1x | 0.9x | 0.6x | 1.3x | 1.2x |
