Dishman Pharmaceuticals - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, Dishman Pharmaceuticals (Dishman) reported lower-than expected sales, while its net profit came in above our expectations. Sales and net profit came in at Rs.350cr and Rs.31cr vs. our expectation of net sales and profit of Rs.383cr and Rs.28cr, respectively. During the quarter, the company's OPM expanded significantly. We maintain our Buy rating on the stock.

Better-than-expected operating performance during the quarter: Dishman reported net sales of Rs.350cr during 4QFY2012, reporting 1.7% yoy growth and below our estimate of Rs.383cr. Segment wise, the CRAMS business grew by 13.8% yoy, whereas the market molecules (MM) business declined by 13.8% yoy. Gross margin for the quarter expanded significantly to 65.4% from 54.9% in 4QFY2011. However, low top-line growth restricted the expansion in OPM to 23.5% (16.1% in 4QFY2011). Consequently, the company reported net profit of Rs.31cr in 4QFY2012 as compared to Rs.23cr in 4QFY2011.

Outlook and valuation: We expect Dishman's net sales and net profit to come in at Rs.1,538cr and Rs.92.8cr, respectively, in FY2014. At current levels, Dishman is trading at 4.6x and 3.7x FY2013E and FY2014E earnings, respectively. Despite being conservative on the margin front, we believe current valuations are attractive. Hence, we maintain our Buy recommendation on the stock with a target price of Rs.92.

Source : Equity Bulls

Keywords