Indoco Remedies posted sales of Rs276cr vs. Rs248cr in 2QFY16, up by 11.6% yoy,
mainly on back of domestic sales (Rs168.8cr, which grew by 22.0% yoy). Overall,
the formulations, which posted sales of RS261.4cr grew, by 13.0% yoy. The
API (Rs135.9cr) dipped by 11.0% yoy. On the operating front, the gross margin
came in at 64.9% (65.0% expected) vs. 64.4% in 2QFY2016, with EBIDTA margin
coming in at 13.5% (15.5% expected) vs. 15.5% in 2QFY2016. Consequently, the
PAT came in at Rs22.1cr vs. Rs21.5cr, a yoy growth of 2.7%. This was against the
expectations of Rs25cr. We maintain our reduce rating on the stock, on back of
expensive valuations.

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