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Vimta Labs Ltd. recently announced its performance for the quarter ended March 31, 2024. Following are the key highlights.

Highlights from the Quarter (Q4 FY24)

Consolidated sales were at Rs.79.7 cr, recording a flat growth for the quarter. Out of the total revenue, 60% of the total sales comes from the pharma sector, food segment contributes ~20%, while rest of the sales come from Electronic & Electrical testing, Diagnostics and Environment testing. Vimta recently forayed into clinical trails in the pharma space and has won a large long term contract last quarter for Analytics from an innovator company. Management anticipates break even for the clinical trails division this year. The Food segment experienced initial setbacks due to supply chain disruptions caused by various external factors. However, this segment has begun to recover and shows promise for continued improvement. Additional capacity to the tune of 2.0 lakh sq ft (current capacity is 4 lakh sq ft) is likely to come up by June 2024, which will double the capacity of the company. Vimta is likely to generate a revenue of Rs.600-700cr, with increase in its capacity in long term.

Following is the guidance given by the company:

1) Sales to reach Rs.500 cr by FY26, aided by capacity expansion in FY25.

2) Given the volume experienced in H2FY24, the management expects growth in the coming quarter.

3) EBITDA margins are expected to improve with an increase in the top line.

OUTLOOK AND VALUATION

We expect the FY26E EPS to be Rs. 32.3 and the PAT margin to be 16.6%. We have assigned a P/E multiple of 22X and arrive at a Target Price of Rs. 727, showcasing an upside potential of 44% from current levels with an investment horizon of 18-24 months, with a BUY rating on the stock.

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