Dishman Pharmaceuticals - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Dishman Pharmaceuticals (Dishman) reported a just-in-line sales, while net profit came in above expectations. The sales and net profit came in at Rs.315cr and Rs.39cr, V/s expectation of net sales and profits of Rs.307cr and Rs.24cr respectively. On the positive side, the company posted good expansion in the operating margins. We maintain our Buy rating on the stock.

Better than -expected operating performance during the quarter: Dishman reported net sales of Rs.315cr during 1QFY2013, reporting growth of 32.9% yoy and above our estimate of Rs.307cr. Segment wise, the CRAMS business grew by 24.1% yoy, whereas the market molecules (MM) business grew by 50.8% yoy growth. Gross margin for the quarter expanded significantly to 73.3%(69.0%). However, the OPM's expanded to 26.5% (18.4%). This has lead to the company reporting a net profit of Rs.39cr as compared to the Rs.15cr during the last corresponding period.

Outlook and valuation: We expect Dishman's net sales and net profit to come in at Rs.1,536cr and Rs.91.3cr, respectively, in FY2014. At current levels, Dishman is trading at 8.6x and 7.0x FY2013E and FY2014E earnings, respectively. Despite being conservative on the margin front, we believe the current valuations are attractive. Hence, we maintain our Buy recommendation on the stock with a target price of Rs.92.

Source : Equity Bulls

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