Shares of IPCA Labs have consistently performed, rising 71 percent from the last year. From quoting at Rs 935 apiece in June 2019, IPCA Labs shares have jumped to around Rs 1,600 currently. Year-to-date, the stock has jumped 39 percent despite the overall market selloff amid the COVID-19 crisis.

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While the entire pharma sector has seen a strong buying interest from investors, the trade optimism in IPCA Labs stems from the fact that it is one of the largest manufacturers of Hydroxychloroquine or HCQS. The anti-malarial drug, used for conditions such as Lupus and arthritis, is now being used as one of the drugs against COVID-19.

Amid the ongoing debate around the pros and cons of the anti-malarial drug for COVID-19 treatment, the central government on Thursday lifted the export ban on hydroxychloroquine or HCQ and its formulations ‘with immediate effect’. The government had banned the export of the drug on March 25, a day after it announced a nationwide lockdown in the wake of the coronavirus pandemic.

However, soon after the export permit was allowed, USFDA withdrew emergency use authorizations (EUA) for Chloroquine Phosphate (CQ) and Hydroxychloroquine Sulfate (HCQ), as the agency no longer believes the drugs may be effective in treating COVID-19 and side-effects outweigh any potential benefit.

Despite that, brokerage house Anand Rathi believes that IPCA has grown robustly due to strong growth in its existing businesses and from opportunities in the supply of HCQS. With the ban on the export of this drug now lifted, it expects supplies to begin soon. The brokerage maintains a 'buy' recommendation with a target of Rs 1,900.

In Q4, the company's domestic formulations recorded a strong 21 percent YoY growth, outpacing most peers, on the back of its specialty branded business. The growth was largely due to a rise in market share to 1.67 percent in FY20 from 1.58 percent in FY19, brokerage firm Phillip Capital noted in a recent report.

Going ahead, Phillip Capital expects IPCA to deliver sustained profitable growth led by -1) strong brand focus in Indian formulations, 2) strong exports led by end-to-end integrated manufacturing, 3) enhanced supply opportunity to the US (through Pisgah).

It also maintains a 'buy' call on the stock and raised its target price to Rs 1,800 from Rs 1,600 earlier.