Citi cuts Dishman Pharma’s price target to Rs 95 from Rs 115

Citi has cut its price target for Dishman Pharma to Rs 95 from Rs 115, while rating the stock a ‘Buy’ citing debt as the main reason.

“We move to a lower P/E multiple (10 times vs 12 times earlier) given the high (and primarily foreign currency) debt on its balance sheet,” said Citi analysts Prashant Nair and Anshuman Gupta in a note to clients. Further re-rating will partly depend on the company’s ability to reduce financial leverage, the broker said. Dishman has debt of Rs 900 crore on its balance sheet, of which Rs 560 crore is foreign currency-denominated, it said.

“Capex requirements are minimal (cRs 600 million over two years) and internal accruals will largely be used to repay debt,” the analysts said.