Shares of Dishman Pharma were down 3 percent after brokerage Avendus said the company’s abrupt gross margin expansion is not matching with the company’s revenue mix.
“The abrupt gross margin expansion has almost single-handedly driven EBITDA margin expansion (year-on-year and quarter-on-quarter). This, however, is pointing to a trend that is opposite to that of the revenue mix,” the brokerage said in a report.
Dishman Pharma’s profit after tax shot up 156 percent to Rs 38.7 crore in April June from Rs 15 crore a year ago. The company also reported a revenue growth of 30 percent to Rs 316.3 crore against Rs 243 crore in the corresponding quarter last year.
The company’s EBITDA margin stood at 26.5 percent against 18.4 percent a year ago, according to a report in The Economic Times.
The brokerage has said with high-margin businesses remaining dull, “the task of supporting the company-level EBITDA” seems to be on the Netherlands operations, “which by itself is volatile and lacks clarity on direction”, it said.
In an interview with CNBC-TV18, JR Vyas, MD of Dishman Pharma said the contract research income was responsible for the phenomenal performance of the company. Dishman also has other contract research orders lined up for the rest of the year and he added that it is going to boost the company’s performance through FY13.