Angel Broking neutral on Indoco Remedies

Angel Broking's report on Indoco Remedies

"Indoco Remedies (Indoco) reported better-than-expected results for 4QFY2014, except on the sales front. It posted a top-line growth of 15.8% yoy to Rs 186cr V/s an expected Rs 214.6cr. The growth in sales was aided by both, domestic and export segments, which grew by 14.3% yoy and 18.2% yoy respectively. The OPM came in at 18.6% (V/s an expected 16.5%), rising by 210bp yoy. This came on the back of 680bp yoy expansion in the GPM to 67.0%. This aided the net profit to come in at Rs 18.6cr, a growth of 44.4% yoy, and higher than our expectation of Rs 15.6cr."

"For the quarter, the company’s net profit come in at Rs 18.6cr, a yoy growth of 44.4%, and higher than our expectation of Rs 15.6cr. The OPM came in at 18.6% (V/s an expected 16.5%), up 210bp yoy. This came on the back of a strong GPM which rose by 680bp yoy to 67.0%. On the sales front, the company posted a top-line growth of 15.8% to Rs 186cr V/s an expected Rs 214.6cr. The growth in the top-line was aided by both, domestic and export segments, which grew by 14.3% yoy and 18.2% yoy respectively."

Outlook and valuation: "We expect net sales to post a 17.2% CAGR to Rs 992cr and EPS to post a 23.4% CAGR to Rs 9.6 over FY2014-16E. At CMP, the stock is trading at 18.2x and 15.5x FY2015E and FY2016E earnings, respectively. We recommend a Neutral rating on the stock, given the valuations", says Angel Broking research report.

Read More