We dont seem to have any thread to discuss the fundamentals on Dishman Pharma . One thread on technicals was dedicated to flag formation in dishman gave returns of around 20% from 100 levels to 120 but failed to achieve the targeted levels of 135 and the stock seems to be undergoing sharp correction in line with most other small and midcaps.
DISHMAN PHARMA
Cmp 65 market cap 522 crores.
The company is a player in CRAMS space catering to innovator companies. It is involved in API intermediates, quarternary compounds, and fine chemicals. Initially the company focussed on QUATS (chemical substances which find applications in manufacture of bulk drugs, drug intermediates, speciality chemicals, ) but it has now increased its focus on CRAMS. And in latest developments the company has entered the generic API space to insulate its revenues from CRAMS risks.
The company started getting into trouble once it took over Carbogen Amcis in Aug 06 and post the 09 crisis, things went sour. Company went on reporting poor quarterly results and it is only in the recently concluded March 12 quarter that things seem to be getting on track in terms of margins.
The stock price in tandem with poor performance till date has been battered down from above 400 levels in Jan 08 to current levels of around 45-46.
Now I guess markets will take a long time to be convinced about the companyâs future prospects after so many poor quarters.
Last few quarters results.
Qtr |
Sales |
OP |
Int |
NP |
Sep 10 |
233 |
57 |
9.5 |
28.29 |
Dec 10 |
238 |
31 |
13.34 |
1.68 |
Mar 11 |
348 |
59 |
10.5 |
22.8 |
Jun 11 |
237 |
49 |
13.74 |
15 |
Sep 11 |
269 |
29 |
15 |
-6.4 |
Dec 11 |
265 |
61 |
16.4 |
16.72 |
March 12 |
350 |
82 |
21.77 |
31.29 |
Jun 12 |
315 |
84 |
23 |
38 |
Sep 12 |
289 |
66 |
13.24 |
26.6 |
Dec 12 |
317 |
64.4 |
25.2 |
16.4 |
Full Year results
Year |
Fy 11(standalone) |
Fy 12(standalone) |
Fy 11(cons) |
Fy 12(cons) |
9M fy 13 cons |
Sales |
420 |
462 |
990 |
1122 |
922 |
Op profit |
74 |
113 |
134 |
148 |
154 |
Int |
40 |
57 |
56 |
73 |
61.5 |
NP |
40 |
45 |
81 |
57 |
82 |
POSITIVES:
1. Company has got very good infrastructure to manufacture generic drugs as well as oncology products. It also has tie ups and relationships with MNC pharma companies for supply of various APIs.
2. Carbogen Amcis- its Swiss subsidiary which till now was a drag on the performance is now on track and has started reporting profits which should improve the consolidated figures.
3. Company is entering the generics business which should reduce the lumpiness in earnings.
4. Company manufactures benzathonium chloride Quats at its Naroda facility and supplies it to global MNCs for their hospital disinfectant formulations. This is a small niche for the company and it enjoys high margins to the tune of 25% in this business.
5. Valuations seem to be attractive with the cmp of around 65 capturing a lot of negative news.
NEGATIVES:
1. Debt remains quite high for the company as seen from the higher interest paid. It is close to around 800. Company is trying to sell off itsf SEZ facility to reduce debt but till date no concrete developments have been announced. Concall mentions the company getting around 100 crores out of land sale most of which will be used to retire debt.
2. Promoter pledging is present to the tune of around 10% of total promoter holding and around 6% of total equity.
3. The results of the company have been very lumpy since past many quarters and hence stock price has suffered. disclosure: no holding but under watchlist.