Hold Dishman Pharma; target of Rs 103: KRChoksey

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Hold Dishman Pharma; target of Rs 103: KRChoksey

KRChoksey has recommended hold rating on Dishman Pharma with a target of Rs 103, in its May 27, 2011 research report.

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KRChoksey has recommended hold rating on Dishman Pharma with a target of Rs 103, in its May 27, 2011 research report.

"Dishman Pharma posted revenues of Rs 345 cr for Q4FY11 which were up by 49% q-o-q & 39% y-o-y. The growth can be mainly attributed to the marketable molecules segment which was up by 105% q-o-q. On a yearly basis the revenues grew by 8% to Rs 991cr. At the Operating front, EBITDA grew by 117% q-o-q & 11% y-o-y mainly due to lower expenditure. However on a full year basis it declined by 21% to Rs 162cr. EBITDA margins for FY11 declined by 600bps and stood at 16.3% against 22.3% last year. Net profit for Q4FY11 stood at 21cr, a growth of 1067% q-o-q. Although the PAT margins improved on q-o-q basis, it declined by 290bps on y-o-y basis. On a full year basis, Net profit stood at Rs 80cr, decline of 32%. Margins continue to bleed at the profitability level mainly due to low margin business contributed by marketable molecules segment. The full year margins declined by 480bps and stood at 8.1% against 12.9% last year."

"Net sales for Q4FY11 were up by 49% q-o-q & 39% y-o-y led by 197% growth in specialty segment mainly Quaternary salts. Revenues for full year were up by 8% to Rs 991cr as against Rs 915cr last year. EBITDA stood at Rs 55cr for the quarter, up by 117% q-o-q and 11% y-o-y. The growth was mainly due to lower expenditure on employees & other expenses front. Restructuring is being carried out at Carbogen amcis wherein the employee strength has been reduced which led to decline in employee cost. Margins improved by 490bps q-o-q and stood at 15.9% against 115 last quarter At the profitability level, the quarter showed an improvement of 470bps & stood at Rs 19cr mainly due to decline in interest expense. However on a full year basis, net profit declined by 32% to Rs 80cr & margins declined by 480bps to report 8.1% against 12.9%."

"We believe that the company posted a sound quarter mainly driven by marketable molecules segment but CRAMS business is yet to show improvement. At CMP of Rs 93, the company is trading at 9.9x its FY12 EPS of Rs 9.4 & 7.6x its FY13 EPS of Rs 12.2. We value the company at 11x its FY12 EPS to arrive at a target price of Rs 103 (upside potential of 11% and recommend HOLD on the stock," says KRChoksey research report.

Public holding more than 90% in Indian cos

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