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Dishman Pharma & Chemicals – Review

June 8, 2010

Dishman Pharmaceuticals & Chemicals (DPCL) has posted disappointing results for the Q4FY10 due to 24%YoY fall in CRAMS revenues. Total income declined by 13%YoY from Rs2.89bn to Rs2.50bn due to the slowdown in Carbogen Amcis (CA) and other CRAMS business. Net profit declined by 71% from Rs717m to Rs211m.

The company’s EBIDTA margin improved by 560bps from 24.2% to 29.8% mainly due to the decline in personnel and other expenses. Material cost increased by 1080bps from 29.8% to 40.6% of total revenues due to the change in product mix and lower sales of high margin CA business. The company’s tax rate has gone up from -1.2% to 26.0% of PBT due to higher deferred tax.

Outlook for FY 2011
The outlook for FY11 is promising. At the CMP of Rs194, the stock trades at 9.8x FY11E EPS of Rs19.7 and 7.4x FY12E EPS of Rs26.3. FY11 EPS estimates is Rs19.7 with a 12 month price target of Rs 240.

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