IPCA LABS 2022-23 Annual Report Analysis

Wed, 12 Jul

IPCA LABS has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

IPCA LABS Income Statement Analysis

• Operating income during the year rose 6.9% on a year-on-year (YoY) basis.
• The company's operating profit decreased by 28.2% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 14.7% in FY23 as against 21.8% in FY22.
• Depreciation charges increased by 12.5% and finance costs increased by 330.3% YoY, respectively.
• Other income grew by 24.7% YoY.
• Net profit for the year declined by 46.0% YoY.
• Net profit margins during the year declined from 15.8% in FY22 to 8.0% in FY23.

IPCA LABS Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	57,637	61,642	6.9%
Other income	Rs m	1,217	1,518	24.7%
Total Revenues	Rs m	58,854	63,160	7.3%
Gross profit	Rs m	12,576	9,033	-28.2%
Depreciation	Rs m	2,324	2,616	12.5%
Interest	Rs m	112	482	330.3%
Profit before tax	Rs m	11,357	7,453	-34.4%
Tax	Rs m	2,248	2,534	12.7%
Profit after tax	Rs m	9,110	4,919	-46.0%
Gross profit margin	%	21.8	14.7
Effective tax rate	%	19.8	34.0
Net profit margin	%	15.8	8.0

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IPCA LABS Balance Sheet Analysis

• The company's current liabilities during FY23 stood at Rs 18 billion as compared to Rs 15 billion in FY22, thereby witnessing an increase of 23.2%.
• Long-term debt stood at Rs 7 billion as compared to Rs 4 billion during FY22, a growth of 64.9%.
• Current assets rose 16% and stood at Rs 52 billion, while fixed assets rose 9% and stood at Rs 34 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 86 billion as against Rs 76 billion during FY22, thereby witnessing a growth of 13%.

IPCA LABS Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	54,648	58,420	6.9
Current Liabilities	Rs m	14,659	18,058	23.2
Long-term Debt	Rs m	3,952	6,518	64.9
Total Liabilities	Rs m	76,215	86,229	13.1
Current assets	Rs m	44,572	51,893	16.4
Fixed Assets	Rs m	31,643	34,336	8.5
Total Assets	Rs m	76,215	86,229	13.1

IPCA LABS Cash Flow Statement Analysis

• IPCA LABS's cash flow from operating activities (CFO) during FY23 stood at Rs 8 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -7 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs 5 billion, an improvement of 19% on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs 6 billion from the Rs 4 billion net cash flows seen during FY22.

IPCA LABS Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	8,561	8,058	-5.9%
Cash Flow from Investing Activities	Rs m	-8,551	-7,250	-
Cash Flow from Financing Activities	Rs m	4,268	5,072	18.9%
Net Cash Flow	Rs m	4,319	5,881	36.1%

Current Valuations for IPCA LABS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 19.4, an decline from the EPS of Rs 35.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 766.9, stands at 39.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.3 times, while the price to sales ratio stands at 3.2 times.
• The company's price to cash flow (P/CF) ratio stood at 30.8 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	227.2	243.0
TTM Earnings per share	Rs	35.9	19.4
Diluted earnings per share	Rs	35.9	19.4
Price to Cash Flow	x	23.5	30.8
TTM P/E ratio	x	29.6	39.5
Price / Book Value ratio	x	8.6	4.0
Market Cap	Rs m	467,336	232,120
Dividends per share (Unadj.)	Rs	4.0	4.0

Ratio Analysis for IPCA LABS

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.9x during FY23, from 3.0x during FY22. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 16.5x during FY23, from 102.4x during FY22. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company declined and down at 8.4% during FY23, from 16.7% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company declined and down at 12.2% during FY23, from 19.6% during FY22. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company declined and down at 6.3% during FY23, from 12.1% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	3.0	2.9
Debtors’ Days	Days	6	6
Interest coverage	x	102.4	16.5
Debt to equity ratio	x	0.1	0.1
Return on assets	%	12.1	6.3
Return on equity	%	16.7	8.4
Return on capital employed	%	19.6	12.2

To see how IPCA LABS has performed over the last 5 years, please visit here.

IPCA LABS Share Price Performance

Over the last one year, IPCA LABS share price has moved down from Rs 969.7 to Rs 766.9, registering a loss of Rs 202.9 or around 20.9%.

Meanwhile, the S&P BSE HEALTHCARE Index is trading at Rs 26,261.6 (up 0.2%). Over the last one year it has moved up from 22,163.6 to 26,261.6, a gain of 4,098 points (up 18.5%).

Overall, the S&P BSE SENSEX is up 20.5% over the year.

(To know more, check out historical annual results for IPCA LABS and quarterly results for IPCA LABS)