Unichem Laboratories - Numbers in line despite margin pressure... - ICICIdirect

Unichem reported in-line set of Q4FY13 numbers. Revenues (standalone) grew ~26% YoY to Rs. 244 crore (I-direct estimate: Rs. 237 crore) driven by 1)~28% growth in domestic branded formulations and 2) ~29% growth in both export formulations and export APIs. EBITDA margins stood at 17.2%, which, however, were below I-direct estimate of 18.5% due to higher raw material cost. This was due to reduced proportion of high margin domestic branded formulations. PAT grew ~34% YoY to Rs. 31 crore (I-direct estimate: Rs. 29.6 crore) on the back of a better operational performance and higher other income. We maintain BUY as we roll forward our estimates to FY15 with better visibility. Note that our estimates do not take into account the Mylan deal for the Indore SEZ.

Formulations drive overall growth

Domestic branded formulations grew ~28% YoY to Rs. 142 crore on the back of 1) lower base 2) traction from existing brands and 3) shuffle of product mix between acute and branded. Exports formulations grew ~29% to Rs. 70 crore driven by 1) incremental launches in the US 2) traction from emerging markets and 3) higher CRAMs offtake.

Mylan proposal for Indore SEZ acquisition

Mylan has proposed to acquire the entire Indore SEZ formulations facility for a consideration of Rs. 160.5 crore. The deal is subject to certain conditions being fulfilled by Unichem such as timely completion of the project and regulatory approvals. The plant is still under construction and the pilot runs are yet to start although the equipment is more or less in place. The land was acquired in September 2007. Till date, it has spent Rs. 100-120 crore by way of capex.

Management confident of achieving guidance; maintain BUY

The management has guided for 1) domestic formulations growth to be 200-300 bps above the IPM growth, 2) ~20% growth in exports formulations and 3) 150-200 bps margins improvement, going ahead. We expect revenues, EBITDA and net profit to grow at a CAGR of 13%, 22% and 23%, respectively, in FY13-15E. Our revised target price is Rs. 228, based on 12x FY15E EPS of Rs. 19.

Source : Equity Bulls

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