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Dishman Pharmaceuticals & Chemicals 3QFY2014 performance highlights and results update

February 17, 2014, Monday, 12:38 GMT | 08:38 EST | 18:08 IST | 20:38 SGT
Contributed by Angel Broking


For 3QFY2014, Dishman Pharmaceuticals & Chemicals (Dishman) posted lower-than-expected numbers, both on the sales and net profit front. The company posted net sales of Rs.313.4cr for the quarter, lower than an expected Rs.370cr. The OPM was slightly better than expected, coming in at 19.4% (vs our expectation of 19.1%), expanding by 123bp yoy. The expansion in the margins came on the back of a 514bp expansion in the gross profit margin and almost flat other expenditure for the quarter. Thus, the net profits came in at Rs.15.2cr (vs an expected Rs.20cr), ie an 8.1% yoy dip for the quarter. We recommend a Buy on the stock with a price target of Rs.117.

Results lower than expected: For 3QFY2014, Dishman posted lower-than-expected numbers, both on the sales and net profit front. The company posted net sales of Rs.313.4cr for the quarter, lower than an expected Rs.370cr. The dip in the sales was on back of the CRAMS segment, which dipped by 1.9% yoy to end the period at Rs.205cr, while the MM segment posted almost flat sales, which came in at Rs.108.3cr. The OPM came in at 19.4% (vs our expectation of 19.1%), expanding by 123bp yoy. The expansion in the margins came on back of a 514bp expansion in the gross profit margin and an almost flat other expenditure for the quarter. Thus, the net profit came in at Rs.15.2cr (vs an expected Rs.20cr), ie an 8.1% yoy dip for the quarter.

Outlook and valuation: We expect Dishman’s net sales and net profit to come in at Rs.1,464cr and Rs.117.7cr, respectively, in FY2015. At current levels, Dishman is trading at 6.1x and 5.4x FY2014E and FY2015E earnings, respectively. We believe the current valuations are attractive, hence, we maintain our Buy recommendation on the stock with a target price of Rs.117.

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