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RECO : HOLD TP : Rs118
Investment Rationale
§ We believe Dishman’s under performance to continue for some more time until clarity emerges in CRAMS
business.
§ Recovery in the business is expected from FY12E onwards on the back of a) commencement of operations in
China facility, b) execution of order worth US$25-30mn in FY12 for a European customer, c) commencement of
HIPO facility, and d) new contract signed with an MNC pharma player (has already signed master supply
agreements in CRAMS business).
§ In lieu of major restructuring at Carbogen Amcis (CA), we expect revenues from CA to be flat in FY11E and
expect recovery post FY12E.
§ Revenue growth is expected to be flat in FY11E and 15% growth in standalone business in FY12E.
Key upside risk to our call
§ Positive outcome on the drug Brilinta would trigger supplies of intermediates to Astrazeneca (peak potential of
US$50mn for Dishman)
§ Earlier than expected ramp up in supplies to US clients may lead to incremental revenue contribution in early
FY12E from HIPO facility in Bavla.
Valuations
§ We expect sales growth to remain subdued at 5% CAGR over FY10-12E.
§ At CMP, the stock is trading at 11.2x FY12E EPS 9.1x FY12E EV/EBITDA.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
RECO : HOLD TP : Rs118
Investment Rationale
§ We believe Dishman’s under performance to continue for some more time until clarity emerges in CRAMS
business.
§ Recovery in the business is expected from FY12E onwards on the back of a) commencement of operations in
China facility, b) execution of order worth US$25-30mn in FY12 for a European customer, c) commencement of
HIPO facility, and d) new contract signed with an MNC pharma player (has already signed master supply
agreements in CRAMS business).
§ In lieu of major restructuring at Carbogen Amcis (CA), we expect revenues from CA to be flat in FY11E and
expect recovery post FY12E.
§ Revenue growth is expected to be flat in FY11E and 15% growth in standalone business in FY12E.
Key upside risk to our call
§ Positive outcome on the drug Brilinta would trigger supplies of intermediates to Astrazeneca (peak potential of
US$50mn for Dishman)
§ Earlier than expected ramp up in supplies to US clients may lead to incremental revenue contribution in early
FY12E from HIPO facility in Bavla.
Valuations
§ We expect sales growth to remain subdued at 5% CAGR over FY10-12E.
§ At CMP, the stock is trading at 11.2x FY12E EPS 9.1x FY12E EV/EBITDA.
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