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Profitability continues to bleed HOLD
Dishman Pharmaceuticals Ltd (DPL) reported weak numbers during the quarter with Topline
showing a growth of 14% y-o-y & decline of 30% q-o-q. The growth was mainly led by
marketable molecule segment which grew by 33%. No improvement could be seen at
Carbogen Amcis & it still continues to make losses which declined by 21% y-o-y & 24% q-oq
and stood at Rs 74cr. CRAMS business grew by 11% y-o-y & posted revenues of Rs 158cr
y-o-y.
At the Operating level, EBITDA stood at Rs 50cr, a decline of 11% y-o-y and 15% q-o-q.
operating margins stood at 20.4%, expansion of 370bps q-o-q & contraction of 570bps y-oy.
The expansion was mainly due to change in the product mix as compared to previous
quarter. Some contribution also came in from high margin Benzethonium chloride.
Reported net profit for Q1FY12 stood at Rs 15cr, a decline of 49% y-o-y & 31% q-o-q.
Profitability was mainly hit due to higher interest expense which grew by 27% q-o-q & 75%
y-o-y. NPM declined by 740bps & stood at 6% in contrast to 13.4% last year.
Operating Performance:
Consolidated Revenues for DPL stood at Rs 243cr for Q1FY12, up by 14% y-o-y & decline of
30% q-o-q. The growth was mainly led by marketable molecules segment. Revenues from
India CRAMS business stood at Rs 84cr, growth of 84% y-o-y. Vitamin-D segment grew by
45% y-o-y & 44% q-o-q. Carbogen Amcis continues to make losses with very lower
contribution this quarter. Restructuring continues at Carbogen Amcis & is expected to
improve in second half of the financial year.
Operating profit for Q1FY12 stood at Rs 50 cr, de-growth of 11% y-o-y & 15% q-o-q. OPM
improved by 370bps q-o-q and declined by 570bps y-o-y & stood at 20.4% mainly due to
higher contribution from India and Vitamin-D business. Also employee expenses & other
expenses went up 14% & 25% respectively y-o-y which affected the margins.
Reported Net profit for Q1FY12 was at Rs 15cr, down by 49% y-o-y & 31% q-o-q. NPM
contracted by 740bps y-o-y & was almost flat q-o-q. Margins were affected mainly on the
back of higher interest expense which grew by 75% y-o-y.
Valuation & recommendation:
Due to delay in execution of its contracts & commencement of few facilities, we revise
our earning estimate and recommend HOLD on the stock. The company’s profitability still
continues to bleed & the turnaround is expected to happen in 2HFY12. We value the
company at 11x its FY12 EPS of Rs 6.4 arriving at a target price of Rs 71 with an upside
potential of 9.2%. At CMP of 65, the company is trading at 10.1x its FY12 EPS of Rs 6.4 &
6.5x its FY13 EPS of Rs 10.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Profitability continues to bleed HOLD
Dishman Pharmaceuticals Ltd (DPL) reported weak numbers during the quarter with Topline
showing a growth of 14% y-o-y & decline of 30% q-o-q. The growth was mainly led by
marketable molecule segment which grew by 33%. No improvement could be seen at
Carbogen Amcis & it still continues to make losses which declined by 21% y-o-y & 24% q-oq
and stood at Rs 74cr. CRAMS business grew by 11% y-o-y & posted revenues of Rs 158cr
y-o-y.
At the Operating level, EBITDA stood at Rs 50cr, a decline of 11% y-o-y and 15% q-o-q.
operating margins stood at 20.4%, expansion of 370bps q-o-q & contraction of 570bps y-oy.
The expansion was mainly due to change in the product mix as compared to previous
quarter. Some contribution also came in from high margin Benzethonium chloride.
Reported net profit for Q1FY12 stood at Rs 15cr, a decline of 49% y-o-y & 31% q-o-q.
Profitability was mainly hit due to higher interest expense which grew by 27% q-o-q & 75%
y-o-y. NPM declined by 740bps & stood at 6% in contrast to 13.4% last year.
Operating Performance:
Consolidated Revenues for DPL stood at Rs 243cr for Q1FY12, up by 14% y-o-y & decline of
30% q-o-q. The growth was mainly led by marketable molecules segment. Revenues from
India CRAMS business stood at Rs 84cr, growth of 84% y-o-y. Vitamin-D segment grew by
45% y-o-y & 44% q-o-q. Carbogen Amcis continues to make losses with very lower
contribution this quarter. Restructuring continues at Carbogen Amcis & is expected to
improve in second half of the financial year.
Operating profit for Q1FY12 stood at Rs 50 cr, de-growth of 11% y-o-y & 15% q-o-q. OPM
improved by 370bps q-o-q and declined by 570bps y-o-y & stood at 20.4% mainly due to
higher contribution from India and Vitamin-D business. Also employee expenses & other
expenses went up 14% & 25% respectively y-o-y which affected the margins.
Reported Net profit for Q1FY12 was at Rs 15cr, down by 49% y-o-y & 31% q-o-q. NPM
contracted by 740bps y-o-y & was almost flat q-o-q. Margins were affected mainly on the
back of higher interest expense which grew by 75% y-o-y.
Valuation & recommendation:
Due to delay in execution of its contracts & commencement of few facilities, we revise
our earning estimate and recommend HOLD on the stock. The company’s profitability still
continues to bleed & the turnaround is expected to happen in 2HFY12. We value the
company at 11x its FY12 EPS of Rs 6.4 arriving at a target price of Rs 71 with an upside
potential of 9.2%. At CMP of 65, the company is trading at 10.1x its FY12 EPS of Rs 6.4 &
6.5x its FY13 EPS of Rs 10.
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