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Dishman Pharmaceuticals & Chemicals
(DISH.BO)
Mixed Bag
Mixed Bag — Rising input costs & inferior product mix offset benefits of a pickup in
revenues & recurring PAT missed our estimate by c9%. While growth trends are
encouraging, profitability is yet to improve to the same extent. At 5xFY13E, valuations
are attractive - if the company is able to sustain growth & improve profitability, there
would be good scope for a re-rating.
Growth Encouraging — Revenues at Rs2.7bn were higher than expected (Rs2.5bn).
Growth (+27% YoY) was driven by the Marketable Molecules (MM) biz (+93% YoY -
Benzethonium supplies led) & Carbogen Amcis (CA) (+12%YoY, +42%QoQ). Overall,
the CRAMS biz registered single digit growth (+5% YoY, +6% QoQ), with the India
based biz staying muted.
EBITDA margin improves but less than expected — Sharp increase in input costs
(RM/sales: +1,063 bps YoY, +563 QoQ) & an inferior product mix (high growth in MM)
were offset by lower staff cost (-3% QoQ, CA restructuring benefit) & other expenses
(excl forex) – leading to higher EBITDA margin (17.6%, +152 bps YoY). This was
however lower than our expectation of 20%. Recurring net income (+26% YoY) was
c9% lower that expected.
New Contracts/Initiatives Update — ) The China facility (HiPo) has been put on the
block now – delay in getting GMP certification for a foreign player like DISH could hurt
viability of the plant. DISH expects to garner cUS$25m+ & repay debt (Net D/E ~1.0);
2) Abbott contract value: US$135m over CY12-CY14 – now sole supplier of
Eprosartan; 3) CA restructuring benefits accruing now - Oct month sales & EBITDA:
c8m CHF & c1m CHF resp vs. monthly run rate of c5m CHF & 0.2m CHF in 1HFY12.
Earnings Call Takeaways — 1) Onco facility in India has started supplying
gemcitabine & 2 more products; 2) Inventory: Rs2.9bn, Receivables: Rs1.6bn; 3) Gross
d ebt: Rs9.7bn – c70% forex debt; 4) Most subs have seen higher profitability.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dishman Pharmaceuticals & Chemicals
(DISH.BO)
Mixed Bag
Mixed Bag — Rising input costs & inferior product mix offset benefits of a pickup in
revenues & recurring PAT missed our estimate by c9%. While growth trends are
encouraging, profitability is yet to improve to the same extent. At 5xFY13E, valuations
are attractive - if the company is able to sustain growth & improve profitability, there
would be good scope for a re-rating.
Growth Encouraging — Revenues at Rs2.7bn were higher than expected (Rs2.5bn).
Growth (+27% YoY) was driven by the Marketable Molecules (MM) biz (+93% YoY -
Benzethonium supplies led) & Carbogen Amcis (CA) (+12%YoY, +42%QoQ). Overall,
the CRAMS biz registered single digit growth (+5% YoY, +6% QoQ), with the India
based biz staying muted.
EBITDA margin improves but less than expected — Sharp increase in input costs
(RM/sales: +1,063 bps YoY, +563 QoQ) & an inferior product mix (high growth in MM)
were offset by lower staff cost (-3% QoQ, CA restructuring benefit) & other expenses
(excl forex) – leading to higher EBITDA margin (17.6%, +152 bps YoY). This was
however lower than our expectation of 20%. Recurring net income (+26% YoY) was
c9% lower that expected.
New Contracts/Initiatives Update — ) The China facility (HiPo) has been put on the
block now – delay in getting GMP certification for a foreign player like DISH could hurt
viability of the plant. DISH expects to garner cUS$25m+ & repay debt (Net D/E ~1.0);
2) Abbott contract value: US$135m over CY12-CY14 – now sole supplier of
Eprosartan; 3) CA restructuring benefits accruing now - Oct month sales & EBITDA:
c8m CHF & c1m CHF resp vs. monthly run rate of c5m CHF & 0.2m CHF in 1HFY12.
Earnings Call Takeaways — 1) Onco facility in India has started supplying
gemcitabine & 2 more products; 2) Inventory: Rs2.9bn, Receivables: Rs1.6bn; 3) Gross
d ebt: Rs9.7bn – c70% forex debt; 4) Most subs have seen higher profitability.
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