In the concall; they had mentioned that net debt levels would start to come down as early as this coming quarter. They had also raised NCDs recenty; but quarter on quarter net debt reduced from 173 CHF to 168 CHF.
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can you pl share link for concall recording
Note: My bad, they have a 2~3 year perspective to bring the net debt level down to 120m from current 168m.
is there any information on their capacities across countries and info on unit wise utilization, sales and margins.
they have 25 manufacturing units which is very high for a company with 2,500 Cr of sales !!
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anybody has any research / info on Dishman. Seems to be turning around.. but not sure.
Have been holding them for quite some time. The issues regarding approvals seem to be behind them now. Capacity building capex is also mostly done. Only maintenance costs to be incurred for the near future. That should help to reduce their debt. Guidance is around 10-15% growth, so nothing too extraordinary but should atleast start showing profitability.
One concern in my opinion should be the weakening of dollar and strengthening for the Swiss franc (mainly this April onwards).
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My couple of cents -
They are on the cusp of improving the performance. I am anticipating FY26 revenue to be about 3,000 Cr. and with 20% EBITA, their current valuation is at 5.5 times EBITA. I feel the research driven business has good probability of re-rating.
Just in terms of human capital - they have 550 Scientist whereas Laurus has 1,100 which is double. However Laurus’s market cap is 10 times that of Dishman. I understand it not a comprehensive comparison but confined to only one parameter. But definitely sufficient to believe that with capabilities (Human and Plants and Approvals) Dishman has potential for a decent market cap growth in coming years.
Disc - Invested
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Have done some research and my findings: Stock price has underperformed for 10 years.. thats a considerable period given company is into CDMO business.. all other peers have done much much better. there are some fundamental issues with the company why this is happening - given below:
1.Company’s revenue from India is only Rs 400 cr (10% of total revenue) and reducing - Q1 FY 2026 India sales are down whopping 40% !! Plants in India have been approved by foreign regulators a year back and India business has not revived
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about 80% revenue is from Europe where cost of operations are high and very low margins. All CDMO companies are opposite - have main operations in India and small companies abroad - given this Dishman will never be able to generate profits.
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Since no profits, company has taken huge debt of Rs 2,300 cr to run operations. Since they are not able to repay from operations, they plan to raise equity (as they have taken enabling approvals in last board meeting). So losses are going to be funded by equity - that is if anybody is foolish enough to invest.. Existing investors are anyway trapped. Indian investors funding loss making subsidiaries abroad which will never make money.
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Investor call of May 2023 summarizes all the problems with the company -
Please refer to the question raised by Mr. Satish Bhatt.
Satish Bhatt: I just wanted to know what is the risk we are anticipating for that 12% to 15% top line and 20% EBITDA growth. Because I have been seeing this company for maybe the last 10, 15 years. And I think every 2 to 3 years, we start having some problems. So, we are back to where we are maybe 3 years back. So, what makes you confident that the next phase of growth will be there and we will have sustainable growth? So, what type of risk can come? We had EDQM risk, it has taken more than 2 years. Some of the products are taking more than 2, 3 years. So, what is the risk you are inbuilding in your modeling. So, where are we going wrong every 3 to 4 years. I think that’s quite a long time and most of the business cycles take place in 3 to 4, maybe 7 years. We are where we were I think 5 to 6 years back.
So, one incident comes, suddenly we are back to where we are in 2019 or maybe something
comes in '22, we are back in 2015, '16 levels. So, what makes the management confident of
delivering the things in terms of the manufacturing things have been done, the marketing has
been done, the R&D has been done, sometimes the erroneous contracts come. So, it is a way I
think we build our contracts. So, something is wrong at the, maybe, say at the company level,
which is always preventing us to grow from some level. Does the Board discuss this any time?
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Latest investor presentation - still not clear on what they do.. with all capabilities financial performance is not good. it seems to be a business model issue - majority operations in high cost Europe - while all other Indian CDMO companies have majority operations in India.