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Indoco Remedies - 3QFY2016 Result Update - Angel Broking
Posted On : 2016-02-06 22:19:38( TIMEZONE : IST )
For 3QFY2016, Indoco Remedies (Indoco)' results were in line with our expectations on the sales front, while the net profit came in lower owing to a lower than expected OPM. The company posted sales of Rs. 255cr (V/s Rs. 257cr estimated), a growth of 19.6% yoy. The growth during the quarter came in through exports (Rs. 112.1cr) which rose 34.6% yoy, while domestic market sales grew 9.8% yoy to Rs. 141.9cr. On the operating front, the OPM came in at 15.4% V/s 18.3% in 3QFY2015 (and V/s an expected 16.5%). Thus, the net profit came in at Rs. 20.4cr V/s Rs. 21.6cr in 3QFY2015, a dip of 5.6% yoy. This is against our expectation of Rs. 25.4cr. Overall, we are Neutral on the stock.
Results lower than expected: The company posted sales of Rs. 255cr (V/s Rs. 257cr estimated), a growth of 19.6% yoy. The growth during the quarter came in through exports (Rs. 112.1cr) which rose 34.6% yoy, while domestic market sales grew 9.8% yoy to Rs. 141.9cr. Exports growth during the period was aided by the regulated markets (Rs. 90.4cr) which grew 36.3% yoy and emerging markets (Rs. 139.0cr) which grew 32.6% yoy. On the operating front, the OPM came in at 15.4% V/s 18.3% in 3QFY2015 (and V/s an expected 16.5%). The margins declined owing to 30.7% and 76.3% yoy rise in employee expenditure and R&D expenditure respectively. Thus, the net profit came in at Rs. 20.4cr V/s Rs. 21.6cr in 3QFY2015, a dip of 5.6% yoy. This is against our expectation of Rs. 25.4cr.
Outlook and valuation: We expect net sales to post a 19.6% CAGR to Rs. 1,199cr and EPS to post a 23.0% CAGR to Rs. 13.6 over FY2015-17E. At the current market price, the stock is trading at 34.3x and 23.7x its FY2016E and FY2017E 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.305.7 as compared to the previous close of Rs. 307.9. The total number of shares traded during the day was 3343 in over 293 trades.
The stock hit an intraday high of Rs. 310.95 and intraday low of 298.25. The net turnover during the day was Rs. 1013793.
