Indoco Remedies posted lower than expected numbers for 3QFY2017. In sales,
the company posted revenues of Rs272cr (Rs276cr expected) v/s Rs256cr in
3QFY2016, growth of 6.2% yoy. The lower growth was on the back of the
formulation business at Rs252.2cr, up 4.5% yoy, API at Rs18.2cr up 32.8% yoy. The
domestic formulation at Rs144.2cr recorded a yoy growth of 5.2%. On EBITDA
front, the company posted an EBITDA of 12.4% (14.5% expected) v/s 15.4% in
3QFY2016. The dip came in on the back of the high R&D expenses, which came
in at 5.1% of sales v/s 3.5% of sales in 3QFY2016. Consequently, PAT came in at
Rs18cr (lower than expectations) v/s Rs19cr in 3QFY2016, de-growth of 7.3% yoy.
On the back of valuations, we maintain our Reduce stance on the stock.

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