Indoco Remedies Limited - Management Meet Note - Nirmal Bang

We met the management of Indoco Remedies Limited (IRL) to understand the latest business developments and to know about its roadmap of achieving Rs 1,000 cr revenues with 20% pre R&D EBITDA margins by FY15 guidance. It has filed for 12 products out of a basket of 22 ophthalmology products, in alliance with Watson and expects 3-4 products approvals in FY14 and 3-4 approvals thereafter every year. The cumulative market size of these products is ~$788 mn and Watson is expected to garner 20-25% of market share, as these are limited competition market. IRL is expected to get development cost + 50% in profits. Exports constitute 35% of FY13 revenues with more than 80% coming from the regulated markets. It has launched four products in the US and has filed six ANDAs including two ophthalmic products. The company expects exports contribution to go as high as 50% in FY15. IRL's domestic portfolio is skewed towards Acute, which garners 90% of the revenues. The company expects to grow @ 14-15% in FY14 which is better than the industry average. The company expects ~300 bps improvement in margins by FY15 from current 16.8% (pre R&D EBITDA) on the back of increased contribution from exports and chronic segment. At CMP the stock is trading at 8.4x on FY14E (Bloomberg consensus) EPS.

Source : Equity Bulls

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