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For 2QFY2012, Indoco Remedies (Indoco) declared in-line results at the revenue
front, reporting growth of 9.4% yoy. However, on the net profit front, growth came
in lower than expected, declining by 9.4% yoy. This was mainly on account of OPM
declining by 95bp yoy to 12.4% (13.4%), lower than our estimates. The domestic
formulation segment grew moderately by 5.3% yoy during the quarter, contributing
64.4% to the total revenue, whereas formulations exports increased by 23.6% yoy.
We recommend Buy on the stock.
Domestic segment disappoints: Indoco reported net sales of `145cr (`132cr), up
9.4% yoy, almost in-line with our expectation of `148cr for 2QFY2012, mainly on
account of lower sales from the domestic high-margin formulations segment. Gross
margin came in at 54.2%, in-line with 2QFY2011. OPM decreased by 95bp yoy to
12.4% (13.4%). Net profit for the quarter came in at `13.8cr, 23.7% below our
estimate of `18.1cr.
Outlook and valuation: We expect net sales to post a 19.6% CAGR to `685cr and
EPS to post a 15.6% CAGR to `55.5 over FY2011-13E. At `373, the stock is trading
at 8.8x and 6.7x FY2012E and FY2013E earnings, respectively. We recommend
Buy on the stock with a revised target price of `583.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, Indoco Remedies (Indoco) declared in-line results at the revenue
front, reporting growth of 9.4% yoy. However, on the net profit front, growth came
in lower than expected, declining by 9.4% yoy. This was mainly on account of OPM
declining by 95bp yoy to 12.4% (13.4%), lower than our estimates. The domestic
formulation segment grew moderately by 5.3% yoy during the quarter, contributing
64.4% to the total revenue, whereas formulations exports increased by 23.6% yoy.
We recommend Buy on the stock.
Domestic segment disappoints: Indoco reported net sales of `145cr (`132cr), up
9.4% yoy, almost in-line with our expectation of `148cr for 2QFY2012, mainly on
account of lower sales from the domestic high-margin formulations segment. Gross
margin came in at 54.2%, in-line with 2QFY2011. OPM decreased by 95bp yoy to
12.4% (13.4%). Net profit for the quarter came in at `13.8cr, 23.7% below our
estimate of `18.1cr.
Outlook and valuation: We expect net sales to post a 19.6% CAGR to `685cr and
EPS to post a 15.6% CAGR to `55.5 over FY2011-13E. At `373, the stock is trading
at 8.8x and 6.7x FY2012E and FY2013E earnings, respectively. We recommend
Buy on the stock with a revised target price of `583.
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