Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Lower domestic sales lead to lower margin, impacting
profit despite in line revenue.
Operating profit of Rs2.9bn (11% yoy growth) with
margin of 14.8% versus our estimate of 16.9% margin.
Strong US performance (10% higher than our estimate)
represents new base of operations; to be sequentially
augmented by key “limited competition” products.
We reduce estimates 3-7% for FY12/13 to factor in
lower domestic contribution and higher interest outflow
on bonus debentures.
Maintain OP. Revise PT to Rs1,725 from Rs1,775
Lower domestic sales lead to lower margins. Q1 FY12
results were lower, despite in line revenue, largely impacted
by lower contribution from higher margin domestic business.
Net sales grew 18% yo-y to Rs19.8bn (est. Rs20 bn), but
operating profit (ex one-time VRS of Rs136m) grew 11%
yoy to Rs2.9bn (margin of 14.8%) versus our estimate of
Rs3.3bn (16.9% margin). Lower tax (due to tax credits in
US) were offset by higher interest on bonus debentures
(which were not in our estimates) with net profit of Rs2.6bn
(25% yoy growth).
Strong US performance key highlight of quarter. US
sales grew 48% yoy (51% in US terms), 10% higher than
our estimate, led by market share gains in base business.
Domestic sales, while muted (6% yoy) is expected to
recover from H2 FY12. PSAI business growth will
sequentially recover, as Naproxen sales from Mexico facility
(annual US$30m) start in Q2, while betapharm is expected
to decline marginally as per our estimates.
Reducing margins for lower domestic sales. We reduce
our estimates by 3-7% factoring in lower domestic sales in
FY12 and also factoring in ~Rs470m of annual interest cost
of bonus debentures recently issued. More important, we
believe Q1 FY12 represent a base of US revenue, which will
sequentially get augmented by limited competition products
in fondaparinux and generic Allegra D24 OTC (from Q2)
and olanzapine and ziprasidone in 2H FY12. Sales from
recently acquired GSK facility in US (annualised sales of
US$60m, higher than our initial estimates of US$40m) are
also accretive to US sales sequentially.
Maintain OUTPERFORM. We maintain OP rating, but
reduce PT to Rs1,725 (Rs1,775 earlier) based on 20x FY13
EPS and Rs62 for NPV value of limited competition
products.
Other key highlights of the quarter
Domestic market
Launched 12 new products in India against 48 products in FY11. No new additions to field
force, which remains at 3,800. The company indicated that domestic business continues to be
impacted by increased competition (for which the company had taken significant price cuts in
Q4 FY11). DRRD expects to revert to healthy growth from H2 FY12, primarily led by increased
field force productivity from the recently ramped up field force.
Recent launch of peg-filgrastim (biosimilar) in India takes total biotech portfolio to four
products for Indian market. Biotech sales contribute almost 7% of India sales (up from 5% in
Q4FY11), largely led by contributions from Reditux. DRRD plans to launch at least one more
product in FY12 in this segment.
US market
Fondaparinux launch to be in phases, partially reflecting the complexity in scale-up of
production. DRRD initially plans to focus on retail/wholesale channels representing almost
40% of the market, with subsequent scale up to the larger hospital segment. DRRD also
indicated the possibility of an authorised generic in fondaparinux but is confident of
maintaining its market share due to its competitive cost positioning. We have estimated
US$40mn and US$60mn from fondaparinux in FY12/FY13 respectively.
Sales from acquired GSK pencillin facility of US$4m in Q1, with commercialization from
April ’11. Annual sales are expected to be around US$60mn (against our earlier estimate of
US$35mn, now revised), with seasonal peaks in H2.
Annual Promius sales of US20mn, largely contributed by Cloderm (estimated US$10m,
collaborated with Valeant) and estimated US$10m from three other branded products. Total
field force estimated ~45 people. Terbinafine is currently in Phase III with expected clinical
data in another 12 months.
Received approval for generic Allegra D24 OTC which will be launched in Q2FY12.
Filed 3 ANDAs in Q1FY12 as against 20 ANDAs during FY11 in the US, with 76 ANDAs
pending approval (36 PIVs and 11 are FTFs). Launched nine products (including four from the
GSK facility). Expect to file around 20 ANDAs in FY12.
Others
Launched two new products during quarter in Russia as against seven products in FY11. OTC
market share has increased to 30% of sales versus 25% in FY11. Overall OTC share is 40%
in Russia. DRRD also expects to target hospitals (5% contribution to DRRD’s Russia sales)
with a basket of products including biotech products. Constant currency growth in Russia was
23% Y-o-Y.
Total capex of Rs1.8 bn in Q1FY12 as against Rs8.83 bn in FY11. FY12 capex expected to
be Rs8-9 bn, largely for new capacities in formulations, biotech capacities and SEZ.
Total debt of Rs23.9 bn as end Q1FY12, largely flat against Rs23.6 bn in end FY11. Net debtequity ratio of 0.38 against 0.39 end FY11. Gross debt includes Rs5 bn of bonus debentures
issued in FY11.
Forex cash flow hedge of US$410m against US$345m end FY11 hedged on an average
between Rs45 to Rs47. In addition US$236m of receivables hedged
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Lower domestic sales lead to lower margin, impacting
profit despite in line revenue.
Operating profit of Rs2.9bn (11% yoy growth) with
margin of 14.8% versus our estimate of 16.9% margin.
Strong US performance (10% higher than our estimate)
represents new base of operations; to be sequentially
augmented by key “limited competition” products.
We reduce estimates 3-7% for FY12/13 to factor in
lower domestic contribution and higher interest outflow
on bonus debentures.
Maintain OP. Revise PT to Rs1,725 from Rs1,775
Lower domestic sales lead to lower margins. Q1 FY12
results were lower, despite in line revenue, largely impacted
by lower contribution from higher margin domestic business.
Net sales grew 18% yo-y to Rs19.8bn (est. Rs20 bn), but
operating profit (ex one-time VRS of Rs136m) grew 11%
yoy to Rs2.9bn (margin of 14.8%) versus our estimate of
Rs3.3bn (16.9% margin). Lower tax (due to tax credits in
US) were offset by higher interest on bonus debentures
(which were not in our estimates) with net profit of Rs2.6bn
(25% yoy growth).
Strong US performance key highlight of quarter. US
sales grew 48% yoy (51% in US terms), 10% higher than
our estimate, led by market share gains in base business.
Domestic sales, while muted (6% yoy) is expected to
recover from H2 FY12. PSAI business growth will
sequentially recover, as Naproxen sales from Mexico facility
(annual US$30m) start in Q2, while betapharm is expected
to decline marginally as per our estimates.
Reducing margins for lower domestic sales. We reduce
our estimates by 3-7% factoring in lower domestic sales in
FY12 and also factoring in ~Rs470m of annual interest cost
of bonus debentures recently issued. More important, we
believe Q1 FY12 represent a base of US revenue, which will
sequentially get augmented by limited competition products
in fondaparinux and generic Allegra D24 OTC (from Q2)
and olanzapine and ziprasidone in 2H FY12. Sales from
recently acquired GSK facility in US (annualised sales of
US$60m, higher than our initial estimates of US$40m) are
also accretive to US sales sequentially.
Maintain OUTPERFORM. We maintain OP rating, but
reduce PT to Rs1,725 (Rs1,775 earlier) based on 20x FY13
EPS and Rs62 for NPV value of limited competition
products.
Other key highlights of the quarter
Domestic market
Launched 12 new products in India against 48 products in FY11. No new additions to field
force, which remains at 3,800. The company indicated that domestic business continues to be
impacted by increased competition (for which the company had taken significant price cuts in
Q4 FY11). DRRD expects to revert to healthy growth from H2 FY12, primarily led by increased
field force productivity from the recently ramped up field force.
Recent launch of peg-filgrastim (biosimilar) in India takes total biotech portfolio to four
products for Indian market. Biotech sales contribute almost 7% of India sales (up from 5% in
Q4FY11), largely led by contributions from Reditux. DRRD plans to launch at least one more
product in FY12 in this segment.
US market
Fondaparinux launch to be in phases, partially reflecting the complexity in scale-up of
production. DRRD initially plans to focus on retail/wholesale channels representing almost
40% of the market, with subsequent scale up to the larger hospital segment. DRRD also
indicated the possibility of an authorised generic in fondaparinux but is confident of
maintaining its market share due to its competitive cost positioning. We have estimated
US$40mn and US$60mn from fondaparinux in FY12/FY13 respectively.
Sales from acquired GSK pencillin facility of US$4m in Q1, with commercialization from
April ’11. Annual sales are expected to be around US$60mn (against our earlier estimate of
US$35mn, now revised), with seasonal peaks in H2.
Annual Promius sales of US20mn, largely contributed by Cloderm (estimated US$10m,
collaborated with Valeant) and estimated US$10m from three other branded products. Total
field force estimated ~45 people. Terbinafine is currently in Phase III with expected clinical
data in another 12 months.
Received approval for generic Allegra D24 OTC which will be launched in Q2FY12.
Filed 3 ANDAs in Q1FY12 as against 20 ANDAs during FY11 in the US, with 76 ANDAs
pending approval (36 PIVs and 11 are FTFs). Launched nine products (including four from the
GSK facility). Expect to file around 20 ANDAs in FY12.
Others
Launched two new products during quarter in Russia as against seven products in FY11. OTC
market share has increased to 30% of sales versus 25% in FY11. Overall OTC share is 40%
in Russia. DRRD also expects to target hospitals (5% contribution to DRRD’s Russia sales)
with a basket of products including biotech products. Constant currency growth in Russia was
23% Y-o-Y.
Total capex of Rs1.8 bn in Q1FY12 as against Rs8.83 bn in FY11. FY12 capex expected to
be Rs8-9 bn, largely for new capacities in formulations, biotech capacities and SEZ.
Total debt of Rs23.9 bn as end Q1FY12, largely flat against Rs23.6 bn in end FY11. Net debtequity ratio of 0.38 against 0.39 end FY11. Gross debt includes Rs5 bn of bonus debentures
issued in FY11.
Forex cash flow hedge of US$410m against US$345m end FY11 hedged on an average
between Rs45 to Rs47. In addition US$236m of receivables hedged
No comments:
Post a Comment