Citi cuts price target for Dishman to Rs 95

MUMBAI: Citi has cut its price target for Dishman Pharma to Rs95 from Rs115, 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 Rs900 crore on its balance sheet, of which Rs560 crore bn is foreign currency-denominated, it said.

"Capex requirements are minimal (cRs600m over two years) & internal accruals will largely be used to repay debt. It has also planned to denotify its SEZ & put the land up for sale - could see an inflow of Rs100 crore," the analysts said.

Dishman shares fell 2.7% to close at Rs 64.05 on Monday.