Company Update - Indoco Remedies - ICICI Direct

Amid strong recovery in the export business, the company's overall revenues grew 10.8% to Rs. 604 crore. Domestic market growth was subdued amid Covid. EBITDA margins improved 800 bps to 18.1% mainly due to better product mix and lower travel & promotional expenses. Subsequent EBITDA grew 98.7% YoY to Rs. 109.7 crore. Net profit for H1 came in at Rs. 42.7 crore (up 342% YoY) vs. Rs. 9.7 crore in H1FY20.

Valuation & Outlook

H1 growth was led by strong growth in export markets (albeit on lower base), strong gross margins and lower travel & promotional spends. The management has guided for significant export growth and margin improvement for FY21. After going through rough patches in FY18-19, where Indoco faced headwinds on the domestic front (structural issues) and exports front (regulatory setbacks), the situation is returning to normalcy. While FY21 growth in the domestic market is likely to be subdued due to Covid-19, exports are likely to deliver robust growth on the back of strong pipeline and visible launch schedule as reflected in the upbeat management guidance. Normalisation of exports dispatches is likely to improve operating leverage as well. With better visibility, we expect the company to maintain consistency and generate strong FCF. We maintain BUY rating and arrive at a revised target price of Rs. 380 based on ~18x FY23 EPS of Rs. 21.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Indoco_CoUpdate_Dec20.pdf

Shares of INDOCO REMEDIES LTD. was last trading in BSE at Rs.296.95 as compared to the previous close of Rs. 291.15. The total number of shares traded during the day was 5079 in over 312 trades.

The stock hit an intraday high of Rs. 300 and intraday low of 287.5. The net turnover during the day was Rs. 1497071.

Source : Equity Bulls

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