Indoco Remedies: 1QFY2018 Result Update - Angel Broking

For 1QFY2018 Indoco Remedies posted poor set of numbers. Sales came in at Rs. 204cr (Rs. 214cr expected) v/s. Rs. 253cr in 1QFY2017, a yoy de-growth of 19.1%. The company witnessed a disruptive 1QFY2018, with domestic as well International sales getting affected adversely due to GST implementation in India and voluntary stoppage of ophthalmic product supplies to US respectively. On operating front, the EBITDA margins came in at (1.7%) ((0.9%) expected) v/s. 14.7% in 1QFY2017, mainly on the back of lower than expected sales during the quarter. Thus, the PAT came in at Rs. (21.7)cr (Rs. (13.8)cr expected) v/s. Rs. 19.7cr in 1QFY2017. We maintain our sell rating on the stock, with a price target of Rs. 153.

Results lower than expected: Sales came in at Rs. 204cr (Rs. 214cr expected) v/s. Rs. 253cr in 1QFY2017, a yoy de-growth of 19.1%. The company witnessed a disruptive 1QFY2018, with domestic as well International sales getting affected adversely due to GST implementation in India and voluntary stoppage of ophthalmic product supplies to US respectively. The formulation sales (Rs. 185.7cr; 90.9% of sales in 1QFY2018) posted a dip of 20.7% yoy. The domestic formulation sales (Rs. 99.7cr) registered a dip of 29.7% yoy. The International formulation sales (Rs. 86.0cr) posted a yoy dip of 6.9%. The API sales (Rs. 14.9cr) posted a yoy dip of 15.1%. On operating front, the EBITDA margins came in at (1.7%) ((0.9%) expected) v/s. 14.7% in 1QFY2017, mainly on the back of lower than expected sales during the quarter. Gross margins came in at 65.2% v/s. 64.8% in 1QFY2017; while R&D expenses were 6.6% of sales in 1QFY2018 v/s. 4.7% of sales in 1QFY2017. Thus, the PAT came in at Rs. (21.7)cr (Rs. (13.8)cr expected) v/s. Rs. 19.7cr in 1QFY2017.

Outlook and valuation: We expect net sales to post a CAGR of 10.8% to Rs. 1,310cr and EPS to post a CAGR of 23.0% to Rs. 12.7 over FY2017-19E. We maintain our SELL rating on back of the valuations and the corresponding lower profitability.

Shares of INDOCO REMEDIES LTD. was last trading in BSE at Rs.197.1 as compared to the previous close of Rs. 192.5. The total number of shares traded during the day was 627 in over 13 trades.

The stock hit an intraday high of Rs. 197.1 and intraday low of 190.35. The net turnover during the day was Rs. 122450.

Source : Equity Bulls

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