Nomura has reiterated its ‘Buy’ rating on IPCA Laboratories, increasing the target price to Rs 1,750, implying a 20.19% upside in the stock price from its previous close of Rs 1,456, citing the company’s growth prospects ahead of the broader market in India and its potential for EBITDA margin expansion.
Nomura’s positive outlook is driven by several factors, including consistent outperformance in the domestic formulation market, which commands higher valuation multiples. The brokerage expects this segment to contribute 50% of IPCA’s FY26/27 EBITDA. Additionally, there is scope for improvement in other segments such as generics and active pharmaceutical ingredients (API), along with cost and revenue synergies from its subsidiary Unichem.
Nomura estimates a 30% earnings CAGR over FY25-27 and believes the growth momentum could remain strong beyond FY27. The company is also targeting an EBITDA margin expansion to 25-26% over time, compared to the FY27 forecast of 23.6%.
This outlook positions IPCA Labs as a strong player in the pharmaceutical sector with significant upside potential.
