Broker’s Call: Ipca Laboratories (Buy)

Why It Matters

The earnings beat and margin expansion signal stronger profitability for Ipca, positioning it for upside in a competitive Indian pharma market and justifying a higher valuation target.

Key Takeaways

• EBITDA rose 19% YoY, beating estimates.
• Domestic formulation revenue grew 12% year‑on‑year.
• Export API surged 26% in 9MFY26.
• Gross margin expanded 400 bps excluding Unichem.
• Target price set at ₹1,710, 17× EV/EBITDA FY28E.

Pulse Analysis

India’s pharmaceutical sector continues to benefit from a blend of domestic demand and export opportunities, and Ipca Laboratories is emerging as a notable beneficiary. The company’s latest nine‑month results show a solid top‑line trajectory, with revenue climbing to ₹2,400 crore driven primarily by a 12% rise in domestic formulations and a 17% jump in export formulations. While API sales remained flat overall, the export API segment posted a striking 26% growth, indicating a re‑acceleration in a historically volatile business line. This balanced performance underscores Ipca’s diversified product mix, which helps mitigate cyclical pressures in any single segment.

Margin dynamics are a key differentiator for Ipca. The firm reported a 400‑basis‑point gross‑margin expansion excluding its Unichem subsidiary, pushing consolidated margins to 72.5%. This improvement stems from a favorable product‑mix shift toward higher‑margin formulations and softer raw‑material costs, factors that are likely to persist as the company leverages its scale. Additionally, the modest forex loss of ₹3.5 crore was offset by stronger operating efficiencies, resulting in an adjusted EBITDA that outperformed the broker’s forecast by ₹50 crore. Such financial resilience positions Ipca to sustain profitability even amid currency volatility.

From an investment perspective, the broker’s revised target price of ₹1,710 reflects a 17× EV/EBITDA multiple for FY28E, a premium that assumes continued margin expansion and export growth. The 31% rise in net profit and a 35% EBITDA boost after adjusting for Unichem suggest that the company’s core operations are gaining momentum. Analysts will watch the API recovery closely, as a sustained export rebound could further enhance earnings visibility. Overall, Ipca’s blend of strong earnings, expanding margins, and strategic export positioning makes it a compelling buy for investors seeking exposure to India’s growing pharma landscape.

Broker’s Call: Ipca Laboratories (Buy)

PL Capital · Updated · February 18, 2026 at 05:50 PM

Target: ₹1,710

Current Market Price (CMP): ₹1,480.15

Ipca reported strong EBITDA of ₹530 crore, up 19 percent year‑on‑year, which was 10 percent above our estimates. Its revenues came in at ₹2,400 crore, up 6.6 percent; broadly in line with our estimate.

• Domestic formulations growth was 12 percent.

• Export formulation was up 17 percent at ₹530 crore, above our estimate.

• API sales remained flat at ₹410 crore. Export API was up 6 percent, whereas domestic API declined 14 percent.

• Revenues from subsidiaries, including Unichem, were at ₹560 crore.

The company has witnessed a 400 bps gross‑margin expansion (ex‑Unichem) for 9MFY26, which should sustain given product‑mix dynamics and softer raw‑material prices. Export API business showed recovery in 9MFY26 with 26 percent growth.

Consolidated gross margins improved 230 bps to 72.5 percent. There was a forex loss of ₹3.5 crore booked under other expenses. Adjusted for forex, other expenses were up 2 percent. EBITDA adjusted for the forex gain came in at ₹530 crore, up 19 percent versus our estimate of ₹480 crore. Adjusted for Unichem, EBITDA growth was 35 percent with an operating profit margin of 25.9 percent. PAT was ₹310 crore, up 31 percent.

We believe recovery in the API segment, higher margins ex‑Unichem, and steady growth in domestic formulation are the key growth drivers. We maintain our “Buy” rating on the stock with a revised target price of ₹1,710 per share, valuing it at 17× EV/EBITDA on FY28E.

Published on February 18, 2026