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Health improves…
Indoco Remedies’ Q4FY11 results were in line with our expectation. Net
sales and profits increased by 10.6% and 48% to | 120.4 crore and | 12.2
crore, respectively, in line with our expectation of | 129 crore and | 11
crore. The growth in sales was driven by healthy growth in APIs and
formulation exports to regulated markets. Due to a change in the product
mix, EBITDA margins increased 333 bps to 14.9%. On the flip side, the
domestic formulation business saw flat growth of 1% to | 72.2 crore
mainly due to lower growth in anti-infectives and respiratory segments.
With a couple of product launches expected in the domestic market in
Q1FY12, we expect the domestic formulations business to normalise in
due course. We have maintained our BUY rating on the stock.
Expands both Aspen and Watson deals
Indoco has signed a five year contract manufacturing agreement with
Aspen for 13 products. All these 13 solid dosage products are already
developed by Aspen. Indoco will run validation batches for all these
products and submit documentation to Aspen while the latter will file with
regulatory authorities. On receiving approval for site transferring, Indoco
will manufacture these products at the Goa facility. Revenues from this
deal are expected to start from Q4FY12. Indoco also extended the Watson
deal from 10 products to 17 products.
Solid dosage facility to be commercialised by June 2011
Construction of a new oral solid facility at Goa is almost complete. It is
planning trial production in May ‘11 and commercialisation by June ‘11. It
expects to receive UK MHRA approval for this facility by November ‘11.
Valuation
Indoco is currently trading at ~ 9.5x FY12E EPS of | 47.8 and ~7.1x
FY13E EPS of | 63.9. We expect the addition of a new field force and new
product launches to help Indoco to grow in line with industry growth.
Sales from the Aspen and Watson deals will improve overall sales. We
have maintained our target price of | 511 on the stock i.e. 8x FY13E EPS
of | 63.9. We also recommend that investors who bought the stock at the
earlier result update price of | 460 to hold the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Health improves…
Indoco Remedies’ Q4FY11 results were in line with our expectation. Net
sales and profits increased by 10.6% and 48% to | 120.4 crore and | 12.2
crore, respectively, in line with our expectation of | 129 crore and | 11
crore. The growth in sales was driven by healthy growth in APIs and
formulation exports to regulated markets. Due to a change in the product
mix, EBITDA margins increased 333 bps to 14.9%. On the flip side, the
domestic formulation business saw flat growth of 1% to | 72.2 crore
mainly due to lower growth in anti-infectives and respiratory segments.
With a couple of product launches expected in the domestic market in
Q1FY12, we expect the domestic formulations business to normalise in
due course. We have maintained our BUY rating on the stock.
Expands both Aspen and Watson deals
Indoco has signed a five year contract manufacturing agreement with
Aspen for 13 products. All these 13 solid dosage products are already
developed by Aspen. Indoco will run validation batches for all these
products and submit documentation to Aspen while the latter will file with
regulatory authorities. On receiving approval for site transferring, Indoco
will manufacture these products at the Goa facility. Revenues from this
deal are expected to start from Q4FY12. Indoco also extended the Watson
deal from 10 products to 17 products.
Solid dosage facility to be commercialised by June 2011
Construction of a new oral solid facility at Goa is almost complete. It is
planning trial production in May ‘11 and commercialisation by June ‘11. It
expects to receive UK MHRA approval for this facility by November ‘11.
Valuation
Indoco is currently trading at ~ 9.5x FY12E EPS of | 47.8 and ~7.1x
FY13E EPS of | 63.9. We expect the addition of a new field force and new
product launches to help Indoco to grow in line with industry growth.
Sales from the Aspen and Watson deals will improve overall sales. We
have maintained our target price of | 511 on the stock i.e. 8x FY13E EPS
of | 63.9. We also recommend that investors who bought the stock at the
earlier result update price of | 460 to hold the stock.
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