Unichem Labs

Integrated specialty pharmaceutical company Unichem Laboratories, with focus on therapeutic areas of cardiology, neurology, orthopedics and anti-infectives, reported standalone revenue of Rs. 309 crore, up by 6% YoY, fuelled by 7% growth in domestic revenue at Rs. 200 crore, in the June 2015 quarter. However, margins remained under pressure, as EBITDA was Rs. 49 crore was earned in the quarter gone by, same as corresponding quarter of last year. Despite forex gain of Rs. 3 crore, net profit slipped to Rs. 29 crore, from Rs. 30 crore YoY when forex loss of Rs. 1.4 crore was posted. Thus, net margins have fallen to single digits.

Company’s domestic portfolio grew 15.1% in the June quarter, as against industry growth of 14.8%, with outperformance from CNS, anti-infective, gastrointestinal and pain segments. Ampoxin Group in Anti Infective and Losar Group for CVS continue to maintain leadership, with improved market shares seen in the first quarter of FY16. On the international front, wholly owned subsidiaries in US and Brazil performed better, although the UK subsidiary reported increased losses. Company continues to remain debt free

Standalone EPS for Q1FY16 stood at Rs. 3.17, as against Rs. 8.31 (consolidated) for FY15. Share is currently ruling at a PE multiple of 24 times. If the company’s margins expand, then there could be room for expansion in valuation multiple. Till then, the stock seems fairly priced.