Dishman Pharma - March 2013 Results Preview - Motilal Oswal

- We expect Dishman Pharmaceuticals' (DISH) revenue to grow by mere 3% YoY to INR3.6b in 4QFY13E on a high base. CRAMS business is likely to report flat sales growth, while marketable molecules will grow by 8.5% YoY.

- EBITDA is likely to decline 21% YoY to INR649m, with EBITDA margin contracting to 18% from a high base of 23.5% last year. Operational performance will be impacted by production disruption at the Netherlands facility.

- Company is likely to report a net profit of INR162m, down 48% YoY, impacted by higher depreciation costs and lower other income.

We believe DISH's domestic operations will benefit from increased outsourcing from India, given its strengthening MNC relations and expansion of some existing customer relationships. However, the company needs to ramp up contracts with innovators to take advantage of the macro opportunity. The stock trades at 4.5x FY14E and 3.7x FY15E earnings. RoCE will continue to be subdued till new facilities and CRAMS contracts ramp up. Maintain Neutral.

Source : Equity Bulls

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