Indoco Remedies - Q2FY21 Result Update - ICIC Direct

Indoco Remedies - Q2FY21 Result Update - ICIC DirectQ2FY21 revenues grew 12.2% YoY to Rs. 328 crore with export formulations growing 63.7% YoY to Rs. 121 crore partly offset by 6.2% YoY fall in domestic formulations to Rs. 175 crore. API segment de-grew 2.4% YoY to Rs. 22.8 crore. EBITDA margins expanded 735 bps YoY to 18.5% on account of better gross margin performance and lower travel & promotional expenses. Subsequent EBITDA grew 86.1% YoY to Rs. 60.7 crore. PAT for the quarter came in at Rs. 25.7 crore (up 228% YoY) vs. Rs. 7.8 crore in Q2FY20.

Valuation & Outlook

Q2 growth was led by strong growth in export markets (albeit on lower base), strong gross margins and lower travel & promotional spends. The management has guided for significant export growth and margin improvement for FY21. After going through rough patches in FY18-19, where Indoco faced headwinds on the domestic front (structural issues) and exports front (regulatory setbacks), the situation is returning to normalcy. While FY21 growth in the domestic market is likely to be subdued due to Covid-19, exports are likely to deliver robust growth on the back of strong pipeline and visible launch schedule as reflected in the upbeat management guidance. Normalisation of exports dispatches is likely to improve operating leverage as well. With better visibility, we expect the company to maintain consistency and to generate strong FCF. We maintain BUY and arrive at a revised target price of Rs. 335 based on ~16x FY23 EPS of Rs. 21.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Indoco_Q2FY21.pdf

Shares of INDOCO REMEDIES LTD. was last trading in BSE at Rs.258 as compared to the previous close of Rs. 255. The total number of shares traded during the day was 1585 in over 89 trades.

The stock hit an intraday high of Rs. 261.5 and intraday low of 255.8. The net turnover during the day was Rs. 410492.

Source : Equity Bulls

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