Dishman’s performance in the past few quarters reflect that the company is gradually getting back on the recovery path as a significant portion of its unproductive assets starts contributing. While the company’s patchy execution track record has been a concern, we take comfort from the signs of a recovery in Carbogen and Dishman’s ability to secure multiple large-ticket deals with Abbott, Astellas, Celegene, Astra Zeneca, DSM and J&J. Given its significant operating leverage, a pick-up in the revenue growth can deliver significant earning upsides and trigger a re-rating. We maintain Outperform rating in the scrip with a target price of R210 (10x FY16E).
Q1FY15 revenues grew 18% yoy to R363 crore (above our estimate) aided by strong sales in CRAMS (41% y-o-y) and Solvay Vitamin (49% y-o-y). Carbogen witnessed weak revenues, with 3% y-o-y growth compared with our estimate of 10%; MM grew 4% y-o-y against our estimate of 20%.
Ebitda margins at 20.8% were below our estimate of 24%, led by lower margins in the Carbogen business (12.6%, down 90bp q-o-q). Margins of Solvay Vitamin witnessed a sharp 1,200bp y-o-y improvement to 27%. Ebitda fell 25% y-o-y to R75.2 crore, which is below our estimate of R84.5 crore. The tax rate came in lower at 17% against our estimate of 22%. Resultant, PAT came in at R23.8 crore against our estimate of R30.4 crore.
IDFC Institutional Securities