For 4QFY2014, Dishman Pharmaceuticals & Chemicals (Dishman) posted results better than our expectations on all fronts. It posted a top-line growth of 15.9% to `400.6cr V/s an expected `359cr. The growth was driven by the CRAMS segment, which posted a yoy growth of 24.6% for the quarter. The OPM came in at 21.9% V/s 19.4% in 3QFY2014 and 20.9% in 4QFY2013. This aided the net profit to come in at `22.6cr (V/s an expected `17cr), a yoy growth of 21.6%. Currently, we have a Buy rating on the stock with a price target of `123.
Results better than expected:
For 4QFY2014, Dishman posted better-than-expected results on all fronts. It posted a top-line growth of 15.9% to `400.6cr V/s an expected `359cr. The growth was driven by the CRAMS segment, which posted a yoy growth of 24.6%, driven by Carbogen Amcis, which grew by 51.8% yoy, while Indian CRAMS declined by 8.2% yoy. The MM segment on the other hand de-grew by 12.2% yoy. With this, the CRAMS segment contributed 72.2% V/s 63.3% in the corresponding quarter of last year. The OPM came in at 21.9% V/s 19.4% in 3QFY2014 and 20.9% in 4QFY2013. This aided the net profit to come in at `22.6cr (V/s an expected `17cr), a yoy growth of 21.6%.
Outlook and valuation:
We expect Dishman’s net sales and net profit to come in at `1,662cr and `178.0cr, respectively, in FY2016. At current levels, Dishman is trading at 4.7x and 4.0x FY2015E and FY2016E earnings, respectively. We believe the current valuations are attractive, hence, we maintain our Buy recommendation on the stock with a price target of `123.
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