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Research
Dishman Pharma - Q4FY12 Result update - Centrum
Posted On : 2012-05-16 11:12:41( TIMEZONE : IST )
Global business revives
Dishman Pharma's (DPCL) results for Q4FY12 were better than our expectations due to higher than expected sales growth and higher other income. The company has reported flat sales against our expectation of 20% decline in revenues. Its EBIDTA margin improved by 600bps YoY from 17.5% to 23.5% in line with our expectations. The company's other income improved by 49%YoY from Rs64mn to Rs96mn. DPCL's tax provision was at 40% of PBT due to the expiry of EOU benefits for its Bawla unit and balance tax of prior quarters. The company's net profit grew by 37%YoY due to margin improvement and higher other income. The company is likely to benefit from anti-cancer, vitamin D3 and disinfectant facilities going on stream during the quarter. We have retained Buy rating for the scrip with a target price of Rs72 (based on 25x FY14E EPS of Rs14.4).
- Revenues flat: During the quarter, DPCL revenues were maintained at Rs3.50bn. The CRAMS business (63% of revenues) grew by14%YoY from Rs1.93bn to Rs2.20bn. The company's other business (37% of revenues) declined by 14%YoY from Rs1.51bn to Rs1.30bn due to lower trading of Quats during the quarter.
- Margin improves: DPCL reported 600bps YoY improvement in EBIDTA margin from 17.5% to 23.5% due to sharp decline in the material cost. The company's material cost declined by 1030bps from 44.9% to 34.6% due to lower sales of traded Quats.
- Other developments: Carbogen Amcis (CA) has developed a prostate cancer drug for Eisai which is currently undergoing phase II clinical trials in the US. Many MNC pharma companies have shown interest in its anti-cancer facility. One European disinfectant producer has plans to enter into JV with the company for a range of disinfectants. These are likely to drive future growth.
- Vitamin D business to drive growth: DPCL has commenced the manufacture of vitamin D3 from its US FDA approved Bawla facility. Currently, vitamin D3 is in short supply and the company has taken a 50% price revision. We expect this business to become a growth driver as there are only a few manufacturers across globe.
- Attractive valuations, Reiterate Buy: We expect DPCL to benefit from the global recovery in CRAMS business and new contracts entered into in FY12. We have revised EPS estimates downwards by 28% for FY13 and by 30% for FY14. At the CMP of Rs43, the stock trades at 3.0x FY13E EPS of Rs14.4 and 2.2x FY14E EPS of Rs19.7. We retain Buy rating for the scrip with a target price of Rs72 (based on 5x FY14 EPS of Rs14.4).
