Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Abbott India - Controlled costs drive margins - ICICI Securities

Posted On: 2020-11-18 01:31:18


Abbott India Limited's (AIL) Q2FY21 performance was muted and lower than our estimates, however, controlled costs boosted margin. Revenue remained flat YoY to Rs10.5bn (I-Sec: Rs11.2bn), EBITDA margin grew 340bps YoY to 22.8% (I-Sec: 22.0%) and adj. PAT grew 1.3% YoY to Rs1.8bn (I-Sec: Rs2.0bn). The muted performance was due to slowdown in demand in some therapeutic areas due to the challenging environment. We expect recovery in the coming quarters with easing of lockdown and remain positive on the company considering its exposure exclusively in domestic formulations, strong balance sheet with deep cash reserves, high return ratios and strong brand equity built over the years. Maintain BUY with a revised target price of Rs18,435/share (earlier: Rs19,314/share).

- Margin boosted by lower costs: Revenue growth remained flat during the quarter as the company witnessed pressure on some therapeutic areas due to the nationwide lockdown on account of COVID-19. However, company controlled its costs that boosted margins. Gross cost declined 4.5% YoY boosting gross margin by 260bps. This was driven by product mix and efficient inventory management. While employee cost rose 2.2% and 30bps YoY; S,G&A expenses declined 9.7% and 120bps YoY with decline in marketing and travelling expenses due to lockdown. Overall, EBITDA margin expanded 340bps YoY (+90bps QoQ) to 22.8%.

- Key products performance: As per AIOCD data the AIL has reported a decline of 4.0% in its key products while the Novo has reported a decline of 2.0%. Udiliv, Duphalac, Vertin, Cremaffin Plus and Digene have reported YoY growth of 5.1%, 6.3%, 10.4%, 12.3% and 22.4% respectively for the quarter. Duphaston reported a steep decline of 32.8% YoY. Thyronorm, Cremaffin and Claribid reported a YoY decline of 3.0%, 10.1% and 10.6% respectively. Amongst the Novo portfolio, Actrapid and Tresiba have reported strong YoY growth of 27.6% and 20.5% respectively. Mixtard, Novomix and Ryzodeg have reported a YoY decline of 6.7%, 5.0% and 15.3% respectively whereas Novorapid and Victoza have remained flattish.

- Outlook: Focus on digital marketing and operating leverage in core portfolio would drive margin improvement of 500bps and result in 18.8% earnings CAGR over FY20-FY23E. While some of these cost savings would be sustainable over long term we expect EBITDA margin to remain stable at ~22-23% over the medium term. Minimal capex requirement would help generate healthy free cashflow of ~Rs28bn over FY21E-FY23E.

- Valuations and risks: We reduce our sales and earnings estimates by 2-3% and 2-4% respectively for FY21E-FY23E to reflect current quarter's performance and lower other income. Maintain BUY with a revised target price of Rs18,435/share based on 42xSep'22E EPS (earlier: Rs19,314/share). Key downside risks are: addition of key drugs in NLEM, product concentration, government intervention, and presence of unlisted promoter company.

Shares of ABBOTT INDIA LTD. was last trading in BSE at Rs.15255 as compared to the previous close of Rs. 15590.4. The total number of shares traded during the day was 439 in over 260 trades.

The stock hit an intraday high of Rs. 15531.95 and intraday low of 15251. The net turnover during the day was Rs. 6742424.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

What do brokerages say on Burger King India Limited's IPO?

The Phoenix Mills - Potential fund infusion may usher in growth - ICICI Securities

Godrej Agrovet - Beneficiary of 60% increase in palm oil prices - ICICI Securities

Automobiles (wholesale) - Wholesale dispatches rise amidst modest retail trends - ICICI Securities

Oil & Gas - Sector Update - Dec 2020 - ICICI Direct

Phoenix Mills (Buy): Asset monetisation at favourable terms... - ICICI Direct

Aditya Makharia's views on November Auto Sales Number for November 2020 - HDFC Securities

Burger King India - IPO Review - ICICI Direct

Quant Pick - LIC Housing Finance - ICICI Direct

Tech Mahindra - Analyst Meet Update - ICICI Direct

Gladiator Stocks - Crompton Greaves Consumer Electricals - ICICI Direct

Derivatives Monthly Outlook - Nifty support at 12800 for ongoing momentum...

Quant Pick - Sun Pharmaceuticals - ICICI Direct

Monetary Policy - Expectation from YES Securities

Sector Update on Asset Management Companies - Subdued but improvement expected - HDFC Securities

Pre Monetary Policy View - Dec, 2020 - Lakshmi Iyer, President and CIO (Debt) & Head Products, Kotak Mutual Fund

Maintain REDUCE on Siemens - Smart recovery priced in - HDFC Securities

Banking Sector Credit Trends - Growth continues to moderate - HDFC Securities

Q2 FY21 GDP: Light at the end of the tunnel - YES Securities

Siemens - Q4 FY20 Result Update - YES Securities

Super action in Home Loans - SBIN, ICICIBC, AXSB, HDFC and LICHF gaining share - YES Securities

Polymer price tracker - Dec 1, 2020 - PVC prices continue to tread higher - ICICI Securities

Bajaj Finance - Company Update - Dec 2020 - ICICI Direct

Siemens Ltd - Healthy revival in orders and margins - ICICI Securities

Covid Recovery Pulse - Nov 30, 2020 - Festive positivity continues in auto retails, e-way bill generation improves...

Derivatives Weekly View (November 27): Momentum expected to continue in broader markets with Nifty support at 12800...

Derivatives Strategy - Positional Option - ICICI Direct

Preview on RBI Monetary Policy - December 2020 - Shanti Ekambaram, Group President - Consumer Banking, Kotak Mahindra Bank

10 things you should know about Burger King India Limited

Views of HDFC Securities and Acuité Ratings & Research on Q2FY21 GDP Numbers

Rollover Report for November 2020 - December 2020: Angel Broking

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Burger King IPO - Angel Broking

Rollover Analysis - Record foreign inflows pushes Nifty to 13k - YES Securities

Ceramic tiles industry - Market share gains sustain for top branded players - ICICI Securities

Gas sector - CGD: Competition to hit margins, volumes and lead to derating - ICICI Securities

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Specialty chemicals - Price trend in Sep-20 - ICICI Securities

Timken India - Q2FY21 Company Update - ICICI Direct

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking

Gujarat Gas - Nov 25, 2020 - Angel Broking



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019