Dishman Carbogen Amcis' Q1FY20 results (Outperformer) - Soft quarter; Growth drivers intact
Q1FY20 result highlights
- Net revenues stood at Rs5.2bn below our est of Rs5.3bn due to flat Carbogen revs in the CRAMS segment. While CRAMS revenues stood at Rs3.8bn (12% yoy), the MM segment grew to 1.2bn (11% yoy).
- GMs came at 75% vs 76.5%/ 77.1% in Q4FY19/Q1FY19, lower than our est of 78.5%. Employee cost came higher at Rs1.9bn (+12% yoy) led by annual increments, Carbogen expansion. Expect quarterly run rate of Rs1.7bn going forward. Other expenses were also high qoq at Rs786m (flat yoy)
- EBITDA came at Rs1.2bn (-1% yoy) vs est of Rs1.3bn. EBIDTAM was 22.9% vs est 24.3% due to translation of costs at a higher exchange rate, higher proportion of cholesterol business as well as an increased share of development revenue in Carbogen.
- PAT stood at Rs343mn (-13% yoy) vs our est of Rs480m. PAT has been impacted by implementation of IndAS 116 norms which has led to higher deprecation / finance charges (Net impact of Rs120m including Rs50m positive EBITDA impact) especially in Carbogen where bulk of the facilities are on long term lease.
Impact on financials: No change in earnings estimates
Valuations & view
After establishing a strong core profitability base (640bps EBITDA margin expansion over FY15-FY18), Dishman is now aiming to step up its CRAMS segment revenue growth momentum. The company has already commercialized atleast 3 NCEs over last 3 years. Further, it has another 15-16 projects which are close to commercialization with additional 16-20 candidates in early Phase III across Carbogen and Indian facilities. This makes it one of the stronger pipelines amongst peers with the company hopeful of 2-3 new drugs getting commercialized every year. This high potential CRAMS pipeline coupled with low current profit base (FY19 CRAMS business EBITDA of ~$60m) can lead to sustained and meaningful profit growth over the medium term. Maintain Outperformer, with a target price of Rs352 (18x FY21E PER).
Dishman Carbogen Amicis Limited is an India-based contract research and manufacturing services (CRAMS) company. The Company is engaged in the process of research and development to late-stage clinical and commercial manufacturing. It operates through two segments: CRAMS and Others. The CRAMS segment is its contract research and manufacturing segment under the long-term supply agreements. The others segment is focused on bulk drugs, intermediates, quaternary ammonium compounds (Quats) and specialty chemicals and outsourced/traded goods. It manufactures phase transfer catalysts, intermediates, fine chemicals, and various products for pharmaceutical, cosmetic and related industries. It also manufactures and supplies a range of Vitamin D and Vitamin D analogues. It also manufactures cholesterol and lanolin related products for pharmaceutical, cosmetic and related markets. The Company operates through nine manufacturing sites in Europe, India, China and Saudi Arabia.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.