Indoco Remedies posted lower than expected numbers for 4QFY2017. In sales, the company posted revenues of `266cr (`311cr expected) v/s. `255cr in 4QFY2016, growth of 4.2% yoy. The formulation business posted sales of `251.6cr, up 3.3% yoy, while API at `12.0cr was down 4.7% yoy. The domestic formulation at `130.1cr recorded a yoy de-growth of 2.2%. On EBITDA front, the company posted an EBITDA of 8.0% (17.6% expected) v/s. 12.7% in 4QFY2016. The dip came in on the back of the high R&D expenses, which came in at 5.2% of sales v/s. 7.4% of sales in 4QFY2016. Consequently, PAT came in at `18cr (lower than expectations) v/s. `39cr in 4QFY2016, de-growth of 14.4% yoy. On the back of valuations, we maintain our SELL on the stock, on back of low profitability.

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