Dishman Pharmaceuticals - 2QFY2013 Result Update - Angel Broking

For 2QFY2013, Dishman Pharmaceuticals & Chemicals (Dishman) reported below expected sales, while net profit came in above expectations. The sales and net profit came in at Rs.289cr and Rs.27cr, vs our expectation of net sales and profits of Rs.322cr and Rs.19cr respectively. On the positive side, the company posted good expansion in the operating margins. We recommend a Buy rating on the stock.

Better than -expected net profit during the quarter: Dishman reported net sales of Rs.289cr during 2QFY2013, reporting a growth of 7.5% yoy and below our estimate of Rs.322cr. Segment wise, the CRAMS business grew by 12% yoy, whereas the market molecules (MM) business came in flat at Rs.101cr. Gross margin for the quarter expanded significantly to 70.0% (63.7% in 2QFY2012). The OPM expanded to 20.1% (10.5% in 2QFY2012). This has lead to the company reporting a net profit of Rs.27cr as compared to the loss of Rs.6cr during the corresponding period of last year.

Outlook and valuation: We expect Dishman's net sales and net profit to come in at Rs.1,536cr and Rs.116.9cr, respectively, in FY2014. At current levels, Dishman is trading at 9.3x and 6.7x FY2013E and FY2014E earnings, respectively. We believe the current valuations are attractive, hence, we maintain our Buy recommendation on the stock with a target price of Rs.145.

Source : Equity Bulls

Keywords