Dishman Carbogen Amcis' Q2FY18 results (Outperformer) - Strong quarter
Q2FY18 result highlights
- Net revenues grew 2% yoy to Rs4.3bn, inline with our estimates of Rs4.4bn driven by sequentially higher revenues from CRAMS business at Rs3.7bn (+36% qoq)
- EBITDA margins stood higher at 30% (vs 20.6% in Q1) vs est of 28% led by operating leverage. Consequently reported EBITDA came at Rs1.3bn (+90%qoq) vs est of Rs1.2bn. GMs came in lower at 82.1% (86% in Q1) vs est of Rs83%. SG&A exp came in lower at Rs2.3bn (+1% yoy) vs est of Rs2.4bn despite the fact that it includes Rs25.5mn forex losses for the quarter (Rs5.7mn in Q2FY17).
- Interest costs increased to Rs134m (Rs114m in Q1) vs est of Rs115m, while other income stood higher at Rs90mn vs est Rs23mn
- Tax rate came in higher at 35% (5.7% in Q1) vs est of 25%. Reported PAT stood higher at Rs484m (Rs130mn in Q1) vs est of Rs460m.
Key positives: Lower cost, higher margins
Key negatives: Higher tax rate
Impact on financials: We have reduced our FY18 estimates by 5% to account for lower revenue growth and maintained our FY19 estimates
Valuations & view
After establishing a strong core profitability base, Dishman is now aiming to step up revenue growth momentum 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 a fairly formidable pipeline with commercialization of two NCEs in last few months adding comfort on the potential of this pipeline. Given its significant operating leverage, a pick-up in revenue growth can deliver significant earning upsides and trigger further re-rating. Maintain Outperformer, with a target price of Rs382 (12x FY19E EBITDA / 27.2x FY19E).
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.