Angel Broking recommends Neutral on Indoco Remedies - 4QFY2014 Result Update

Indoco Remedies (Indoco) reported better-than-expected results for 4QFY2014, except on the sales front. It posted a top-line growth of 15.8% yoy to Rs. 186cr V/s an expected Rs. 214.6cr. The growth in sales was aided by both, domestic and export segments, which grew by 14.3% yoy and 18.2% yoy respectively. The OPM came in at 18.6% (V/s an expected 16.5%), rising by 210bp yoy. This came on the back of 680bp yoy expansion in the GPM to 67.0%. This aided the net profit to come in at Rs. 18.6cr, a growth of 44.4% yoy, and higher than our expectation of Rs. 15.6cr. Currently, we have a Neutral rating on the stock.

Net profit above expectation: For the quarter, the company's net profit come in at Rs. 18.6cr, a yoy growth of 44.4%, and higher than our expectation of Rs. 15.6cr. The OPM came in at 18.6% (V/s an expected 16.5%), up 210bp yoy. This came on the back of a strong GPM which rose by 680bp yoy to 67.0%. On the sales front, the company posted a top-line growth of 15.8% to Rs. 186cr V/s an expected Rs. 214.6cr. The growth in the top-line was aided by both, domestic and export segments, which grew by 14.3% yoy and 18.2% yoy respectively.

Outlook and valuation: We expect net sales to post a 17.2% CAGR to Rs. 992cr and EPS to post a 23.4% CAGR to Rs. 9.6 over FY2014-16E. At CMP, the stock is trading at 18.2x and 15.5x FY2015E and FY2016E earnings, respectively. We recommend a Neutral rating on the stock, given the valuations.

Shares of INDOCO REMEDIES LTD. was last trading in BSE at Rs.156.55 as compared to the previous close of Rs. 155.75. The total number of shares traded during the day was 17486 in over 1204 trades.

The stock hit an intraday high of Rs. 161.7 and intraday low of 154. The net turnover during the day was Rs. 2752693.

Source : Equity Bulls

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