IPCA Laboratories Limited

Ipca's domestic business delivered robust growth of 11% in Q4 FY25 and 12% for the full year. The company outpaced the overall market, achieving 13.2% growth (IQVIA) against an 8% market growth. This performance led to an improvement in market share by approximately 9 basis points, reaching 2.07% by mid-March 2025. The company's focus on metro cities post-COVID has contributed to a 4.67% increase in market share from these regions.

Ipca demonstrated significant margin improvement in FY25. Consolidated EBITDA margin expanded by 2.22% to 18.94% for the full year, surpassing the company's guidance of around 18%. Standalone EBITDA margin also saw a substantial increase of 3.37% to 22.66% for FY25, with absolute EBITDA growing 27% to INR1,533 crores. For FY26, the company expects consolidated EBITDA margins to further improve by approximately 1% to around 20%.

The company is actively investing in future growth, with four new greenfield manufacturing plants scheduled to commence trial production in FY26. These include a monoclonal antibody facility in Pithampur, an intermediate API facility in Wardha, a new domestic formulation facility in Dewas, and an injectable/oral liquid facility in North Carolina, US. These facilities represent a significant capex outlay, with approximately INR600 crores already spent (cumulative up to FY25) and another INR400 crores planned for FY26, totaling INR1,000 crores for FY25-FY26.

Unichem Laboratories, now consolidated, reported an 18% growth in business to INR2,211 crores for FY25, with its EBITDA margin improving significantly from 4.87% to 12.55%. Management expects Unichem's EBITDA margin to further improve by about 1% in FY26, with revenue growth of 8-10%. Synergy benefits from the integration, particularly in expanding Unichem's product reach to new markets like Australia, New Zealand, and Europe, are anticipated to materialize a year after next.

While branded export formulations grew 10% in FY25, the overall generic export business remained flat at INR981 crores. This was primarily due to a 74% decline in the South African market (from INR113 crores to INR39 crores) following the loss of certain tenders, and an 11% degrowth in Australia & New Zealand due to inventory rationalization. The API business also saw muted growth of only 1% for the full year FY25, though management expects stability and 6-7% growth in FY26, with volume and price growth anticipated.

Ipca is making inroads into the US market with its own products, having shipped INR65 crores worth of goods in FY25 and targeting INR100 crores in sales for FY26. The company plans to file 6-7 new products in FY26, building on a capacity to develop around 20 products annually for global markets. While acknowledging competition pressure in the US generic market, Ipca's strategy is bolstered by its own API capabilities, with most filings backed by in-house APIs.