Dishman Carbogen Amicis stock's analysis

• Dishman Carbogen Amicis is engaged in the process of research and development to late-stage clinical and commercial manufacturing.
• Fundamental analysis
• Market Cap:  2,670 Cr.
• Current Price:  170.20
• 52 weeks High / Low  218.30 / 46.05
• Book Value:  365.78
• Stock P/E: 14.81
• Dividend Yield: 0.12 %
• ROCE: 5.72 %
• ROE: 3.95 %
• Sales Growth (3Yrs): %
• Listed on BSE and NSE
• Company Website
• Face Value:  2.00

• PEG Ratio:
• Promoter holding: 63.21 %
• Pledged percentage: 0.00 %
• Debt:  1,231 Cr.
• Price to Earning: 14.06
• EPS:  11.19
• Net profit:  180.31 Cr.
• Profit growth: -14.47 %
• Profit growth 7Years: %
• Net profit preceding 12months: 184.11 Cr.
• Profit growth 3Years: %
• Dividend yield: 0.12 %
• Debt to equity: 0.21
• Sales last year:  2,059 Cr.
• Sales growth: -0.73 %
• Unpledged promoter holding: 63.21 %
• Investments:  190.63 Cr.
• Carbogen Amics Ltd (DACL) is an integrated CRAMS (Contract ResearcAnd Manufacturing Services) player with strong capabilities right from process research & development to late stage clinical and commercial manufacturing. DCAL operates under two segments – CRAMS business (contributed 76.5% to the overall revenue in FY20) and the marketable API molecules (23.5%).  It has a global presence with manufacturing sites across Switzerland, UK, France, Netherlands, India and China. DCAL has a market cap of Rs2,670 cr. As on June 20, ICICI Prudential Pharma Healthcare & Diagnostics Fund is the largest non-promoter institutional holder holding 4.87% in DCAL. The delivery volume of the stock in the last trading session was ~38% below average of its last 30 days average deliverable volumes.
   
  

  Investment rationale
   

  Robust R&D capabilities and recognized manufacturing facilities: DCAL has superior chemistry skills & capabilities with 28 dedicated R&D labs with multiple-shift R&D operations, including HIPO labs (Hybrid Inverse Treatment Planning Optimization). Globally, Dishman group has ~550 scientists, with 50+ doctorates as senior scientists. It has 25 multi-purpose facilities at Bavla, Naroda, Manchester, Switzerland, Netherlands and Shanghai and 1 dedicated production facility for APIs and Intermediates at Bavla. It has Aisa’s largest HIPO facility at Bavla, India. The facilities are approved by recognized health agencies like USFDA, MEB, SWISS, MEDIC, ANSM, TGA, WHO, KFDA, etc. The large capacities provides DCAL with a competitive edge to win big long-term contracts.

   

  Preferred global outsourcing partner: Dishman Carbogen is an integrated CRAMS player present along the entire value chain from building blocks to commercialization and product launch stage. It has preclinical to commercial manufacturing capabilities ensuring seamless process & technology transfer from lab to plant. It is a single partner for R&D, process development and commercial production. Its close proximity to clients with global presence together with the customer’s trust & confidence on the company for entire drug life-cycle engagement makes it a preferred global outsourcing partner.

   

  Supportive Industrial outlook: Oncology (cancer treatment) as a therapeutic segment is a key focus area for Dishman. It requires highly potent drugs which are highly effective at much smaller dosages and have the ability to target only the diseased cells. Currently, around 50% of Dishman’s annual revenues come from Oncology therapeutic segment. The Oncology is expected to be the most critical therapeutic segment driving the global spend on medicine in future. It is expected to grow at a CAGR of 10-13% between 2017-22 led by a constant upsurge of the immune-oncology treatment which drastically improves outcomes and resistance for patients. At present, Dishman has 25+ molecules in early phase III and approx 18 molecules in late phase III. Out of these, around 50% molecules are in Oncology segment.

   

  Financials & Valuations: The Company has a strong balance sheet with a Debt/Equity ratio of 0.16x as on March 2020. It has an improving profitability with its EBITDA and adj. PAT margins improving from 22.8% to 25.6% and 7.9% to 11.8% over FY13-FY20 respectively. At current price, the stock is trading at 10.7x of its 1-year forward earnings which looks attractive.
   Positive:
  Stock is trading at 0.47 times its book value
  Promoter holding has increased by 1.81% over last quarter.
• Negative
• Company might be capitalizing the interest cost