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M a r g i n s u n d e r p r e s s u r e b u t g r o w t h i n t a c t …
Divi’s Q3FY12 results were above our estimates. Revenues increased by
32.5% to | 417.4 crore higher than our expectation of | 386 crore for the
quarter ended December 2011. The growth was triggered by both APIs
and custom synthesis. On a constant currency basis, revenues grew
24.5% YoY. Despite a favourable currency, the EBITDA margin declined
300 bps YoY to 36.2% on account of commissioning of the
Vishakhapatnam facility and spurt in power and freight costs. EBITDA
increased 22.4% to | 151.1 crore, slightly higher than our expectation of |
148.6 crore. Increase in tax rate by 330 bps restricted net profit growth to
20.7% YoY to | 122.6 crore, higher than our estimate | 116 crore. We are
maintaining our HOLD rating on the stock as the company continues to
trade in the premium valuation territory.
ƒ Vizag SEZ clocks sales around | 35 crore
The company has commissioned part of its Vizag SEZ facility in
Q2FY12. The facility has clocked sales of around | 35 crore during
the quarter. Overall capex for the Vizag facility is ~| 200 crore. The
remaining facility will be commissioned by the end of current fiscal.
Divi’s expects USFDA inspection to happen by middle of next fiscal.
ƒ 9MFY12 profits up 27% YoY
For nine months ending December 2011, revenues increased 35.9%
YoY to | 1133.6 crore. However, EBITDA margins declined 150 bps
to 36% on the back of partial commissioning of the Vizag SEZ
facility. Net profit increased 27% YoY to | 331.2 crore.
V a l u a t i o n
We expect sales, EBITDA and PAT to grow at a CAGR of 25%, 22% and
16%, respectively between FY11-13E. The company is well placed to cash
in on the revival in the global CRAMS space. Its custom synthesis
business is also complementing the overall growth well. We have revised
our price target upwards to | 802 based on 18x revised FY13E EPS of |
44.5 as earlier than expected commissioning of Vizag facility and the scale
of performance justifies upward revision. We maintain HOLD as we
believe the premium valuation is justified due to virtual debt free status,
hefty cash balance and rekindling of CRAMS industry prospects.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M a r g i n s u n d e r p r e s s u r e b u t g r o w t h i n t a c t …
Divi’s Q3FY12 results were above our estimates. Revenues increased by
32.5% to | 417.4 crore higher than our expectation of | 386 crore for the
quarter ended December 2011. The growth was triggered by both APIs
and custom synthesis. On a constant currency basis, revenues grew
24.5% YoY. Despite a favourable currency, the EBITDA margin declined
300 bps YoY to 36.2% on account of commissioning of the
Vishakhapatnam facility and spurt in power and freight costs. EBITDA
increased 22.4% to | 151.1 crore, slightly higher than our expectation of |
148.6 crore. Increase in tax rate by 330 bps restricted net profit growth to
20.7% YoY to | 122.6 crore, higher than our estimate | 116 crore. We are
maintaining our HOLD rating on the stock as the company continues to
trade in the premium valuation territory.
ƒ Vizag SEZ clocks sales around | 35 crore
The company has commissioned part of its Vizag SEZ facility in
Q2FY12. The facility has clocked sales of around | 35 crore during
the quarter. Overall capex for the Vizag facility is ~| 200 crore. The
remaining facility will be commissioned by the end of current fiscal.
Divi’s expects USFDA inspection to happen by middle of next fiscal.
ƒ 9MFY12 profits up 27% YoY
For nine months ending December 2011, revenues increased 35.9%
YoY to | 1133.6 crore. However, EBITDA margins declined 150 bps
to 36% on the back of partial commissioning of the Vizag SEZ
facility. Net profit increased 27% YoY to | 331.2 crore.
V a l u a t i o n
We expect sales, EBITDA and PAT to grow at a CAGR of 25%, 22% and
16%, respectively between FY11-13E. The company is well placed to cash
in on the revival in the global CRAMS space. Its custom synthesis
business is also complementing the overall growth well. We have revised
our price target upwards to | 802 based on 18x revised FY13E EPS of |
44.5 as earlier than expected commissioning of Vizag facility and the scale
of performance justifies upward revision. We maintain HOLD as we
believe the premium valuation is justified due to virtual debt free status,
hefty cash balance and rekindling of CRAMS industry prospects.
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