CRISIL assigns valuation grade of 5/5 to Plethico Pharma

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CRISIL assigns valuation grade of 5/5 to Plethico Pharma

CRISIL Research has come out with its report on Plethico Pharmaceuticals. The research firm has assigned a valuation grade of 5/5 to the company and assigned fundamental grade of 3/5 in its August 17, 2011 report.

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Plethico Pharma BSE | NSE 30/05/12 Are Mutual Funds betting on Plethico Pharma?

CRISIL Research has come out with its report on Plethico Pharmaceuticals . The research firm has assigned a valuation grade of 5/5 to the company and assigned fundamental grade of 3/5 in its August 17, 2011 report.

Plethico Pharmaceuticals Ltd's (Plethico's) Q2CY11 results were below CRISIL Research's expectations. While revenue growth during the quarter was strong (up 29% y-o-y), decline in margins adversely affected profitability. EBITDA margins at 19.0% declined by 560 bps on a y-o-y basis and by ~100 bps on a q-o-q basis due to rise in raw material costs. Though the interest cost in this quarter was more or less flat, we expect it to go up in the coming quarters given the recent hike in interest rates. We will revise our estimates post interaction with the management. We maintain the fundamental grade of 3/5.

Q2CY11 result analysis
• Plethico's Q2CY11 revenues grew 29% y-o-y (grew 28% q-o-q) to Rs 4,543 mn.

• EBITDA margin contracted 560 bps to 19% due to an increase in raw material costs and other expenses. On a q-o-q basis, EBITDA margin decreased 104 bps.

• PAT grew a marginal 2% y-o-y to Rs 674 mn despite significantly lower apportionment of depreciation and taxes. PAT margin decreased ~388 bps y-o-y to 14.8%. On a q-o-q basis, PAT margin improved 164 bps.

Valuations: Current market price has strong upside
We continue to use the price to earnings multiple method to value Plethico. Our current outstanding fair value is Rs 530 per share, which translates into a valuation grade of 5/5. We may revisit our fair value post interaction with the management, says CRISIL Research report.

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"

To read the full report click on the attachment