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Divi's Lab
Strong 4Q beat highlights
higher revenue visibility; Buy
„Raise PO post 4Q beat; Reiterate Buy
Following 70% profit beat in 4Q, driven largely by 30% higher than expected
sales, we raise EPS forecasts by 12-16% over FY12-13E. Consequently, increase
PO to Rs900, also factoring roll over to FY13E, retaining P/E multiple of 20x,
justifiable on stronger visibility and return ratios.
Strong 53% sales growth led to profit beat in 4Q
Divi's 4Q profit at Rs1.75bn grew 35% yoy and 78% qoq, which was 70% ahead
of our estimates. This was mainly led by 30% beat in sales at Rs4.8bn (up 53%
yoy/54% qoq) driven by higher volume pick up in generic APIs. Carotenoid sales
grew to Rs200mn (vs Rs130mn last year) while revenue mix favored generic API
(52% of sales) compared to custom synthesis. As a result, EBITDA grew 30% yoy
at Rs1.94bn (our est Rs1.56bn) with margins also largely in line at 40.3%.
Raised revenue outlook on stronger visibility
Raise our sales forecasts over FY12-13E by 10%-14%, as we believe current
business momentum is sustainable on improved orderflow and volume pick up.
We expect contribution from recently commissioned unit from 2HFY12E, ramping
to Rs4-5bn over the next 2 years (~35% of FY11 sales). Scale up of carotenoid
business to Rs1.6bn by FY13E (from Rs620mn in FY11), higher orders from
repeat customers (~70%) & new DMF supplies would drive sales outlook.
Attractive valuations; Divis preferred play in CRAMS
Divis trades at 14.3x FY13E P/E, which is at ~20% discount to its historic average
as well as the sector. We believe the stock should trade in line with large peers,
given stronger sales led earnings visibility, and superior margins and return ratios
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Divi's Lab
Strong 4Q beat highlights
higher revenue visibility; Buy
„Raise PO post 4Q beat; Reiterate Buy
Following 70% profit beat in 4Q, driven largely by 30% higher than expected
sales, we raise EPS forecasts by 12-16% over FY12-13E. Consequently, increase
PO to Rs900, also factoring roll over to FY13E, retaining P/E multiple of 20x,
justifiable on stronger visibility and return ratios.
Strong 53% sales growth led to profit beat in 4Q
Divi's 4Q profit at Rs1.75bn grew 35% yoy and 78% qoq, which was 70% ahead
of our estimates. This was mainly led by 30% beat in sales at Rs4.8bn (up 53%
yoy/54% qoq) driven by higher volume pick up in generic APIs. Carotenoid sales
grew to Rs200mn (vs Rs130mn last year) while revenue mix favored generic API
(52% of sales) compared to custom synthesis. As a result, EBITDA grew 30% yoy
at Rs1.94bn (our est Rs1.56bn) with margins also largely in line at 40.3%.
Raised revenue outlook on stronger visibility
Raise our sales forecasts over FY12-13E by 10%-14%, as we believe current
business momentum is sustainable on improved orderflow and volume pick up.
We expect contribution from recently commissioned unit from 2HFY12E, ramping
to Rs4-5bn over the next 2 years (~35% of FY11 sales). Scale up of carotenoid
business to Rs1.6bn by FY13E (from Rs620mn in FY11), higher orders from
repeat customers (~70%) & new DMF supplies would drive sales outlook.
Attractive valuations; Divis preferred play in CRAMS
Divis trades at 14.3x FY13E P/E, which is at ~20% discount to its historic average
as well as the sector. We believe the stock should trade in line with large peers,
given stronger sales led earnings visibility, and superior margins and return ratios
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