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Indoco Remedies 4QFY2014 performance highlights and results update

May 29, 2014, Thursday, 14:54 GMT | 09:54 EST | 18:24 IST | 20:54 SGT
Contributed by Angel Broking


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. Currently, we have a Neutral rating on the stock.

Net profit above expectation: 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.