Indoco Remedies Ltd (NSE:INDOCO) (BSE:532612)

Indoco Remedies Limited is an India-based pharmaceutical company. The Company is engaged in the manufacturing and marketing of Formulations (Finished Dosage Forms) and Active Pharmaceutical Ingredients (APIs) in India. This Company’s products are used in therapies like Gastrointestinal, Anti-infectives, Respiratory, Anti-diabetics and Multi-vitamins. The top brands promoted by the division are Cyclopam, Oxipod, Cloben-G, Karvol Plus, Glychek, Tuspel Plus, MCBM 69 and Hemsyl. The Company’s manufacturing facilities include Goa Plant I, Goa Plant II, Goa Plant III, Baddi Plant and Waluj Plant. The Company has two subsidiaries which include Xtend Industrial Designers and Engineers Pvt. Limited, and Indoco Pharmchem Limited.

Official website: www.indoco.com

For 4QFY2015, Indoco Remedies posted sales of Rs212cr V/s an expected Rs219cr and V/s Rs186cr in 4QFY2014, a yoy growth of 13.8%, driven by domestic sales. On the operating front, the EBITDA margin came in at 18.4% V/s an expected 17.3% and V/s 18.9% in 4QFY2014, a dip of 46bp yoy. R&D expenditure rose by 78.2% while employee expenses rose by 1.0%. R&D expenses as a percentage of sales was amounted to 3.5% V/s 2.2% in 4QFY2014. Also, deprecation expenses rose by 59.2%. The Adj. PAT came in at Rs18.8cr V/s Rs18.6cr in 4QFY2014, a growth of 1.1% yoy. We maintain our Neutral rating on the stock. OPM better than expected: For 4QFY2015, Indoco Remedies posted sales of Rs212cr V/s an expected Rs219cr and V/s RS186cr in 4QFY2014, a yoy growth of 13.8%, driven by domestic sales. The domestic market posted sales of Rs129cr, registering a growth of 17.1% yoy. Domestic formulations grew 16.7% yoy to Rs123cr, while API grew by 25.8% yoy to Rs61.4cr. Exports (Rs82cr), on the other hand, grew by 9.0% yoy. Formulation exports grew 9.9% yoy to Rs75cr, while API exports posted a flat growth to Rs6.84cr. On the operating front, the EBITDA margin came in at 18.4% V/s an expected 17.3% and V/s 18.9% in 4QFY2014, a dip of 46bp yoy. R&D expenditure rose 78.2% yoy, and employee expenses rose 1.0% yoy. R&D expenses as a percentage of sales amounted to 3.5% V/s 2.2% in 4QFY2014. Also, deprecation expenses rose by 59.2% yoy. The Adj. PAT came in at Rs18.8cr V/s Rs18.6cr in 4QFY2014, a growth of 1.1% yoy. Outlook and valuation: We expect net sales to post a 22.7% CAGR to Rs1,262cr and EPS to post a 31.4% CAGR to Rs15.5 over FY2015-17E. At the current market price, the stock is trading at 28.6x and 24.1x its FY2016E and FY2017E earnings, respectively. We recommend a Neutral rating on the stock, given the valuations.

Source: http://www.angelbroking.com

For 1QFY2016, Indoco Remedies (Indoco) reported lower than estimated numbers on the sales and OPM fronts, while the net profit has come in marginally above our expectations. The company posted sales of Rs216cr for the quarter V/s Rs198cr in 1QFY2015 (V/s an expected Rs254cr), a 9.1% yoy growth. Sales were driven by exports, which posted a yoy growth of 19.8%. On the operating front, the gross margin came in 64.6% V/s 63.3% in 1QFY2015, an expansion of 130bp yoy; while the EBDITA margin came in at 16.3% V/s 18.1% in 1QFY2015, a dip of 180bp yoy. Also, a higher deprecation charge of Rs15cr V/s Rs9.5cr in 1QFY2015, negated the positive impact of higher other income of Rs7.6cr V/s Rs1.3cr in 1QFY2015. Consequently, the PAT came in at Rs20.3cr V/s Rs20cr in 1QFY2015, a growth of 1.1% yoy. This was against our PAT expectation of Rs26.9cr. We maintain our Neutral rating on the stock. Results lower than expected: The company posted sales of Rs216cr V/s Rs198cr in 1QFY2015 (V/s Rs254cr expected), ie a 9.1% yoy growth. Sales were driven by exports, which came in at Rs83.8cr, ie a yoy growth of 19.8%. The growth in exports was driven by formulations, which rose by 23.1% yoy. On the operating front, the gross margin came in 64.6% V/s 63.3% in 1QFY2015, an expansion of 130bp yoy; while the EBDITA margin came in at 16.3% (V/s our expectation of 18.0%) V/s 18.1% in 1QFY2015, a dip of 180bp yoy. The contraction in OPM is mainly on account of higher R&D expenses during the quarter, which came in at 3.0% of sales V/s 2.2% of sales in 1QFY2015. The PAT came in at Rs20.3cr V/s Rs20cr in 1QFY2015, a growth of 1.1% yoy. This is against our expectation of a PAT of Rs26.9cr for the period. The lower PAT is mainly on account of lower-thanexpected sales. Outlook and valuation: We expect net sales to post a 22.7% CAGR to Rs1,262cr and EPS to post a 31.4% CAGR to `15.5 over FY2015-17E. At the current market price, the stock is trading at 26.5x and 22.3x its FY2016E and FY2017E earnings, respectively. We recommend a Neutral rating on the stock, given the valuations.

Source: http://www.angelbroking.com/