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Improved performance of CRAMS business
Dishman Pharma (DPCL) Q3FY12 numbers were above our expectation due to
marked improvement in CRAMS business. The company’s revenues grew by
12%YoY, EBIDTA margin by 990bps and net profit by 896%YoY on a smaller
base. The management is confident of improved performance in FY13 and has
revised sales guidance from 15% to 20%. DPCL’s three manufacturing
facilities for oncology, vitamin D and disinfectant formulations at Bavla went
on stream during the quarter. These are likely to contribute significantly in
FY13. We reiterate Buy for the scrip with a revised target price of Rs92 (based
on 6x FY13 EPS).
Lower sales growth of CRAMS business: During the quarter, DPCL’s total revenues
grew by 12%YoY from Rs2.38bn to Rs2.66bn. The company reported 7%YoY sales
growth in CRAMS from Rs1.58bn toRs1.69bn due to the fall in domestic revenues and
Synprotec, UK. However, Carbogen Amcis (CA) reported strong growth of 29%YoY from
Rs795mn to Rs1,023mn. The marketable molecule (MM) segment reported 31%YoY
sales growth from Rs736mn to Rs964mn. Vitamin D business grew by 36%YoY from
Rs375mn to Rs509mn. Revenues of other MM grew by 26% from Rs361mn to Rs455mn.
Sharp improvement in Margin by 990bps: DPCL’s EBIDTA margin improved by
990bps from 13.2% to 23.1% due to overall reduction in costs. Material cost declined by
290bps from 35.2% to 32.3% of total revenues due to the change in product mix.
Personnel expenses were lower by 350bps from 30.6% to 27.1% due to re-structuring at
CA. Other expenses declined by 340bps from 20.9% to 17.5% due to lower marketing
cost. There was a forex gain of Rs81mn against Rs57mn. The company’s net profit
improved by 896%YoY from Rs17mn to Rs167mn on a lower base.
Commencement of production at three units: DPCL’s three production units for
vitamin D, Hipo facility and disinfectant formulations facilities went on stream during
the quarter. These units are likely to contribute significantly from FY13 onwards. The
company’s vitamin D and analogue facility at net Netherlands has received approval
from US FDA and hence can export to the US market. Moreover, CA has received an 18m
euro pa order from Astellas for a new oncology product.
China facility on block: The company is looking at a prospective buyer for its
manufacturing facility at Shanghai SEZ as there is considerable cost increase in China.
DPCL has commenced the manufacture of three anticancer products at this facility to
cater to the overseas market.
Abbott sales likely to improve: DPCL expects revenues from Abbott to improve by
1.5x in FY13 with a 150tpa contract for Eprosartan Mesylate (EM) and supply of two
more APIs. Moreover, the company will supply anti-TB products to Johnson & Johnson.
Revised guidance: With an improvement in CRAMS business during the quarter, the management
has revised its sales guidance from 15% to 20% and predicted healthy EBIDTA for FY13.
Reiterate Buy: We have revised our EPS estimates upwards for FY12 and for FY13 by 18% and
5% respectively. We expect the company to benefit from additional revenues from three new
manufacturing facilities, benefit of re-structuring at CA and new CRAMS contracts. At the CMP
of Rs60, the stock trades at 8.9x FY12E EPS of Rs6.7 and 3.9x FY13E EPS of Rs15.3. We reiterate
Buy with a revised target price of Rs92 (based on 6x FY13E EPS).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Improved performance of CRAMS business
Dishman Pharma (DPCL) Q3FY12 numbers were above our expectation due to
marked improvement in CRAMS business. The company’s revenues grew by
12%YoY, EBIDTA margin by 990bps and net profit by 896%YoY on a smaller
base. The management is confident of improved performance in FY13 and has
revised sales guidance from 15% to 20%. DPCL’s three manufacturing
facilities for oncology, vitamin D and disinfectant formulations at Bavla went
on stream during the quarter. These are likely to contribute significantly in
FY13. We reiterate Buy for the scrip with a revised target price of Rs92 (based
on 6x FY13 EPS).
Lower sales growth of CRAMS business: During the quarter, DPCL’s total revenues
grew by 12%YoY from Rs2.38bn to Rs2.66bn. The company reported 7%YoY sales
growth in CRAMS from Rs1.58bn toRs1.69bn due to the fall in domestic revenues and
Synprotec, UK. However, Carbogen Amcis (CA) reported strong growth of 29%YoY from
Rs795mn to Rs1,023mn. The marketable molecule (MM) segment reported 31%YoY
sales growth from Rs736mn to Rs964mn. Vitamin D business grew by 36%YoY from
Rs375mn to Rs509mn. Revenues of other MM grew by 26% from Rs361mn to Rs455mn.
Sharp improvement in Margin by 990bps: DPCL’s EBIDTA margin improved by
990bps from 13.2% to 23.1% due to overall reduction in costs. Material cost declined by
290bps from 35.2% to 32.3% of total revenues due to the change in product mix.
Personnel expenses were lower by 350bps from 30.6% to 27.1% due to re-structuring at
CA. Other expenses declined by 340bps from 20.9% to 17.5% due to lower marketing
cost. There was a forex gain of Rs81mn against Rs57mn. The company’s net profit
improved by 896%YoY from Rs17mn to Rs167mn on a lower base.
Commencement of production at three units: DPCL’s three production units for
vitamin D, Hipo facility and disinfectant formulations facilities went on stream during
the quarter. These units are likely to contribute significantly from FY13 onwards. The
company’s vitamin D and analogue facility at net Netherlands has received approval
from US FDA and hence can export to the US market. Moreover, CA has received an 18m
euro pa order from Astellas for a new oncology product.
China facility on block: The company is looking at a prospective buyer for its
manufacturing facility at Shanghai SEZ as there is considerable cost increase in China.
DPCL has commenced the manufacture of three anticancer products at this facility to
cater to the overseas market.
Abbott sales likely to improve: DPCL expects revenues from Abbott to improve by
1.5x in FY13 with a 150tpa contract for Eprosartan Mesylate (EM) and supply of two
more APIs. Moreover, the company will supply anti-TB products to Johnson & Johnson.
Revised guidance: With an improvement in CRAMS business during the quarter, the management
has revised its sales guidance from 15% to 20% and predicted healthy EBIDTA for FY13.
Reiterate Buy: We have revised our EPS estimates upwards for FY12 and for FY13 by 18% and
5% respectively. We expect the company to benefit from additional revenues from three new
manufacturing facilities, benefit of re-structuring at CA and new CRAMS contracts. At the CMP
of Rs60, the stock trades at 8.9x FY12E EPS of Rs6.7 and 3.9x FY13E EPS of Rs15.3. We reiterate
Buy with a revised target price of Rs92 (based on 6x FY13E EPS).
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