Dishman Carbogen Amcis' Q2FY19 results (Outperformer) - Steady quarter
Q2FY19 result highlights
- Net revenues were down 7% qoq to Rs4.5bn, below our estimates of Rs4.7bn led by lower CRAMS revenues at Rs3.3bn (-3%/3% yoy/qoq) and others at 1.05bn (9%/5% yoy/qoq).
- Other operating income stood lower at Rs153mn vs Rs335mn in Q1 (Q2 included realised forex gains of Rs140mn vs Rs278.4mn in Q1). Mgt had earlier guided that based on their current hedge positions, they expect significant forex gains to sustain through FY19.
- GMs came in significantly higher at 84.6% vs 77.1% in Q1 and our est of 78%. Other exp stood higher at Rs903mn (+14% qoq) and included forex impact of Rs75mn. Reported EBITDA came at Rs1.28bn (28.7%) vs our est of Rs1.26bn (26% margins).
- Depreciation came in higher at Rs575mn (+5%/6% yoy/qoq) vs est of Rs525mn; other income was higher at Rs150mn vs Rs61mn in Q1 and our est of Rs50mn
- PBT of Rs708mn came higher vs our est of Rs650mn. Tax rate stood higher at 37.9% vs our est of 32%. Resultant reported PAT stood at Rs440mn (-9% yoy) inline with our est
Key positives: Higher GMs and higher other income
Key negatives: Lower revenues, higher depreciation and tax rate
Impact on financials: We have increased our FY19/20 EBITDA estimates by 1%/3%.
Valuations & view
After establishing a strong core profitability base (640bps EBITDA margin expansion over FY15-FY18), Dishman is now aiming to step up revenue growth momentum also in coming years. Dishman has 15-16 projects which are close to commercialization with another 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 (FY18 CRAMS business EBITDA of ~$50m) can lead to sustained and meaningful profit growth over the medium term. Maintain Outperformer, with a target price of Rs342 (11x FY20E EBITDA).
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.