HDFC Securities is bullish on Dishman Carbogen Amcis has recommended buy rating on the stock with a target price of Rs 380 in its research report dated January 25, 2019.
HDFC Securities' research report on Dishman Carbogen Amcis
While Dishman’s (DCAL) 3Q performance was ahead of our estimates, revenue growth was muted as a large chunk of orders was shifted over to 4Q. Despite revenue growth being limited to 4/7% YoY/QoQ, a shift in business mix towards high-margin segments (CRAMS India and Vit. D) led to a 750bps YoY expansion in gross margin (up to 85% in 3Q) and a 10% YoY growth in EBITDA (despite higher opex), with margin at 27.7% (+136bps YoY). Lower tax rate at 31% further boosted PAT, which stood at Rs 514mn, up 22/17% YoY/QoQ. Having achieved Rs 14.1bn revenues and 27.1% EBITDA margin (+800bps YoY) in 9MFY19, we expect DCAL to deliver 13% plus rev. growth and 27.5% plus margin for FY19 post a bumper 4Q.
The key near-term triggers include the successful launch of Nuzyra in the US in Feb-19, positive phase 3 data for Crenolanib in 1HCY19 and 1L maintenance indication for Niraparib in ovarian cancer. Maintain BUY with a TP of Rs 380 (15x Dec-20E EPS).
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