Advisory Desk
January 14, 2012
Abbott India
BUY
CMP
`1,434
M&A, strategic alliance gives a headstart
Target Price
`1,852
Abbott India (AIL), a 50.44% subsidiary of Abbott Capital India Ltd., UK, is
Investment Period
12 Months
involved in the manufacture and marketing of pharmaceutical, diagnostic,
nutritional and hospital products. Consolidation of Solvay Pharma India Ltd. (SPIL)
Stock Info
with the company is expected to improve operating efficiencies, leading to
Sector
Pharmaceuticals
expansion of EBITDA margin and an extended product portfolio with addition of
Market Cap (` cr)
3,046
brands from SPIL. We expect the company to post a 24% CAGR top-line over
Beta
0.4
CY2010-13E on the back of continued focus on advertising, increased employee
52 Week High / Low
176 / 292
expenses, new therapeutic segments and its agreement with Zydus Cadila. At the
Avg. Daily Volume
1,667
current price of `1,434, the stock is trading at 13.9x CY2013E EPS, which we
Face Value (`)
10
BSE Sensex
16,155
believe is attractive for an MNC. We Initiate Coverage on AIL with a Buy rating
Nifty
4,866
and a target price of `1,852.
Reuters Code
ABOT.BO
Synergies with SPIL to improve the business model: Amalgamation of SPIL with AIL
Bloomberg Code
BOOT IN
expanded the company’s product portfolio, giving access to untapped therapeutic
segments, in addition to increasing exposure to its existing therapeutic segments.
Shareholding Pattern (%)
Besides increased revenue, the synergy between the two companies is expected to
Promoters
75.0
improve operating efficiencies, thus leading to margin expansion.
MF / Banks / Indian Fls
5.3
Multiple revenue drivers to facilitate 24% CAGR top-line growth: AIL’s expenditure
FII / NRIs / OCBs
2.3
on advertisement and employee as a percent of sales has been continuously
Indian Public / Others
17.5
increasing since CY2006. Continued focus on these factors is expected to drive
revenues going forward. Moreover, AIL’s focus on therapeutic areas such as
diagnostics and nutrition; and its agreement with Zydus Cadila (India) to market
Abs. (%)
3m 1yr 3yr
25 products in emerging markets from CY2013E could further add to revenues.
Sensex
(4.3)
(15.8)
78.1
ABBOTINDIA
(1.2)
12.2
247.5
Debt-free, cash-rich with higher returns: We expect AIL’s cash reserves and RoIC
to increase to `594cr and 114.3%, respectively, by CY2013E, aided by additional
cash from SPIL, which was also a cash-rich company. Due to excess cash in the
books, we believe it may be a potential delisting candidate.
Key financials
Y/E December (` cr)
CY2010 CY2011E
CY2012E CY2013E
Net sales
1,037
1,516
1,734
1,979
% chg
30.5
46.2
14.4
14.1
Net profit
61
135
180
219
% chg
(21.4)
120.8
33.4
21.6
EBITDA (%)
6.7
13.0
13.8
14.3
EPS (`)
44.6
63.4
84.6
102.9
P/E (x)
49.9
22.6
16.9
13.9
P/BV (x)
10.0
5.4
4.3
3.5
RoE (%)
21.2
30.9
28.4
27.7
RoCE (%)
24.0
41.2
34.9
33.4
EV/Sales (x)
2.8
1.8
1.5
1.2
Shareen Batatawala
+91-22-3935 7800 Ext: 6849
EV/EBITDA (x)
41.2
13.6
10.7
8.5
Source: Company, Angel Research
Please refer to important disclosures at the end of this report
1
Advisory Desk
Abbott India
Investment arguments
Synergies with SPIL to improve the business model
Product portfolio to expand - Giving access to newer segments
Expansion of product portfolio and
AIL had a gastroenterology portfolio comprising Digene, Cremaffin and Ganaton.
access to new therapeutic segments to
Digene is the market leader in the antacid segment with 35% market share, while
drive future top-line growth
Cremaffin is a leader in the laxative segment. With the addition of Duphalac,
Creon and Udiliv through the merger of SPIL, the company would become a leader
in the gastroenterology segment in India.
The company would also gain access to the women’s health segment with products
such as Duphaston, Duvadilan, Pro-9, Life and B-crip post-merger. Duphaston
contributed 23% to the total revenue of SPIL in CY2010.
Moreover, AIL’s CNS portfolio will strengthen with the addition of SPIL’s Vertin, a
market leader in the vertigo segment in India.
Contribution margin to witness an uptrend
Better product mix facilitates superior
The company’s net raw-material cost as a percent of sales is expected to decline to
margins
~56% in CY2013E from 62.4% in CY2010 on account of change in business mix
for the combined entity. As a result, the contribution margin will witness a
northward shift from an average of ~11% for CY2006-10 to 14.3% in CY2013E.
Exhibit 1: Declining raw-material cost (%) to expand EBITDA margin
1,200
68
66
1,000
64
800
62
60
600
58
400
56
54
200
52
0
50
CY2008
CY2009
CY2010
CY2011E CY2012E CY2013E
Net raw material cost (LHS)
% of net sales (RHS)
Source: Company, Angel Research(*CY2011E-13E are consolidated results for AIL and SPIL)
January 14, 2012
2
Advisory Desk
Abbott India
Extended therapeutic focus & alliances to facilitate growth
Focus on therapeutic segments like
AIL is present across different segments such as pain management,
nutrition and diagnostic, along with the
gastroenterology, metabolic, urology, thyroid, diabetes, neurology, anesthesiology
marketing agreement with Zydus Cadila
and neonatology. The company has some of the leading pharmaceutical brands
to drive top-line growth
such as Digene, Cremaffin, Brufen, Thyronorm, Zolfresh and Pediasure, which are
the main revenue drivers. The company has collaborated with the government and
schools to increase awareness about child nutrition, thus expanding its focus on the
nutritional segment with its product Pediasure, which is a market leader in nutrition
products. AIL also plans to increase its exposure in the diagnostics segment, which
has immense growth prospects. We believe these measures would significantly
increase the company’s revenue over 2-3 years.
The company recently entered into an agreement with Zydus Cadila to market 25
products in 14 emerging markets from CY2013E, which would add to company’s
revenue going forward.
Cash-rich company with higher return ratios
Cash rich company - A potential for
AIL is a debt-free company with cash reserves of `189cr as of December 2010,
delisting
and RoE and RoIC of 21.2% and 65.6%, respectively, for CY2010. Post the merger
with SPIL, which was also a debt-free entity with cash reserves of `51cr for
CY2010, we expect the cash to increase to `330cr by CY2011 end, while RoE and
RoIC would increase to 30.9% and 115.4%, respectively, for CY2011E. Due to
high cash reserves in the books, we believe there is a potential that the company
may go for delisting.
January 14, 2012
3
Advisory Desk
Abbott India
Financials
Exhibit 2: Key assumptions
CY2011E
CY2012E
CY2013E
Revenue growth (AIL)
12.5
12.9
12.3
Revenue growth (SPIL)
19.5
19.0
19.8
Operating margin (%)
13.0
13.8
14.3
Source: Company, Angel Research
Top line to grow at a 24% CAGR over CY2010-13E
We expect net sales to post a CAGR of
We expect the company’s revenue to grow at a CAGR of 24% over CY2010-13E,
24% over CY2010-13E driven by
from `1,037cr to `1,979cr. The 46% yoy surge in revenue in CY2011E is due to
merger with SPIL, increasing focus on
consolidation of results with SPIL.
advertisement and raising employee
count.
Exhibit 3: Revenue accelerates post merger
2,000
50
1,600
40
1,200
30
800
20
400
10
0
0
CY2008
CY2009
CY2010
CY2011E CY2012E CY2013E
Revenue
Revenue growth
Source: Company, Angel Research (*CY2011E-13E are consolidated results for AIL and SPIL)
Advertisement spends (percent of sales) increased from 2.5% in CY2006 to 4.3%
in CY2010; while employee expenses (percent of net sales) increased from 7.1% in
CY2006 to 12% in CY2010, enabling increase in employee count by 34% yoy in
CY2010 to 1,747. We expect the company to maintain its focus on these expenses
which form a critical part of the pharmaceutical industry thus facilitating medium to
long term revenue growth.
Exhibit 4: Continued focus on advertisement and employee spend to drive revenue growth
50
5
14
14
12
12
40
4
10
10
30
3
8
8
6
6
20
2
4
4
10
1
2
2
0
0
0
0
CY2006
CY2007
CY2008
CY2009
CY2010
CY2005 CY2006 CY2007 CY2008 CY2009 CY2010
Advertisement cost (LHS)
% of net sales (RHS)
Employee expense (LHS)
% of net sales (RHS)
Source: Company, Angel Research
January 14, 2012
4
Advisory Desk
Abbott India
Blended EBITDA margin to witness expansion
Higher EBITDA margins for SPIL and
Average EBITDA margin for SPIL was at ~24% for the past five years, while that of
better operating efficiencies facilitate
AIL has been at ~11% for the same period. Due to operating efficiencies post the
expansion of EBITDA margin for
merger, we expect EBITDA margins to expand to 14.3% in CY2013E.
merged entity.
Exhibit 5: Higher blended EBITDA margin vs. standalone (AIL) margins
30
25
20
15
10
5
0
CY2007
CY2008
CY2009
CY2010
CY2011E CY2012E CY2013E
Abbott India
Solvay Pharma
Merged
Source: Company, Angel Research
Exhibit 6: EBITDA headed northwards
300
200
250
150
200
100
150
50
100
0
50
0
(50)
CY2008
CY2009
CY2010
CY2011E CY2012E CY2013E
EBITDA (LHS)
yoy growth (RHS)
Source: Company, Angel Research (*CY2011E-13E are consolidated results for AIL and SPIL)
January 14, 2012
5
Advisory Desk
Abbott India
Improved business model to augment profit growth
Better net profit growth expected on
Amalgamation of AIL and SPIL along with other initiatives like focus on new
account of enhanced business model
therapeutic areas and Zydus Cadila agreement is expected to improve business
model for the merged entity. This would lead to better revenue and expansion of
EBITDA margin thus leading to better profitability. Hence, we expect the company’s
net profit to post a CAGR of 53% over CY2010-13E, from `61cr in CY2010 to
`219cr in CY2013E.
Exhibit 7: PAT to grow at 53% CAGR over CY10-13E
250
140
120
200
100
80
150
60
40
100
20
0
50
(20)
0
(40)
CY2008
CY2009
CY2010
CY2011E CY2012E CY2013E
PAT (LHS)
PAT growth (RHS)
Source: Company, Angel Research(*CY2011E-13E are consolidated results for AIL and SPIL)
January 14, 2012
6
Advisory Desk
Abbott India
Relative valuation
AIL ranks second among MNC pharmaceutical companies in terms of revenue
after GlaxoSmithKline Pharma. Post the merger with SPIL on January 1, 2011, the
company has moved upwards in its ranking (based on revenue) from the 4th
position as of December 2010 to the 2nd position as of September
2011,
overtaking Pfizer and Aventis Pharma. The company is trading at cheap valuations
of 1.9x its EV/Sales as compared to its peers.
Exhibit 8: Peer comparison
Sales
OPM
PAT EPS
RoE
PE P/B
EV/Sales EV/EBITDA
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
Glaxo
2,397
22.8
645
76.2
31.0
25.7
8.0
6.2
27.0
AIL
1,455
11.1
89
41.8
17.6
34.3
6.0
1.9
17.1
Aventis
1,276
21.1
207
89.8
18.7
25.3
4.7
3.7
17.5
Pfizer
1,083
17.4
176
59.0
14.1
18.6
2.6
2.2
12.7
Novartis
792
20.6
153
47.9
19.5
13.2
2.6
2.5
12.3
Wyeth
555
33.1
111
49.0
24.1
17.3
4.2
2.9
8.6
Astrazeneca
550
17.8
62
24.6
28.3
63.3
17.9
7.0
39.1
Source: Company, Angel Research (all figures are last 3 quarter annualized)
Outlook and valuation
We expect the company’s revenue and profit to post a CAGR of 24% and 53%,
respectively, over CY2010-13E, along with EBITDA margin expansion from an
average of ~11% for AIL for CY2006-10 to 14.3% for CY2013E. The stock is
currently trading at a PE of 13.9x and EV/Sales of 1.2x based on CY2013E
financials, which is considered cheap for an MNC pharmaceutical company.
Hence, we Initiate Coverage on the stock with a Buy recommendation and a target
price of `1,852, based on target PE of 18x for CY2013E and implied EV/sales of
1.7x for CY2013E.
Exhibit 9: One-year forward PE band
Exhibit 10: One-year forward EV/Sales band
2,000
3,500
3,000
1,600
2,500
1,200
2,000
1,500
800
1,000
400
500
0
0
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Price
8x
12x
16x
20x
EV
1.6x
1.2x
0.8x
0.4x
Source: Company, Angel Research
Source: Company, Angel Research
January 14, 2012
7
Advisory Desk
Abbott India
Key concerns
Shift of focus to the unlisted subsidiary
Abbott Laboratories, USA, bought the healthcare solution business from Piramal
Healthcare Ltd. (PHL) for a consideration of US$3.8bn, which was transferred to
the unlisted subsidiary, Abbott Healthcare Pvt. Ltd (AHPL). The transfer included
manufacturing facilities at Baddi, Himachal Pradesh; rights to approximately 350
brands and trademarks; and
~5,000 employees relating to its domestic
formulations business. Since the unlisted subsidiary is 100% owned with extended
portfolio from Piramal’s healthcare business, there is a possibility that the parent
company shifts its focus to the unlisted entity. Also, the merger would limit listed
AIL’s access to untapped therapeutic segments where PHL already exists.
Exhibit 11: Therapeutic segments of different companies
Segment
Abbott U.S
AIL
SPIL
AHPL
PHL
CNS
√
√
√
√
√
Gastroenterology
√
√
√
√
√
Pain Mgmt
√
√
√
√
√
Metabolic
√
√
√
×
×
Anesthesia
√
√
×
×
√
Neonatology
√
√
×
×
×
Women Health
√
×
√
√
×
Vaccine (Influenza)
√
×
√
×
×
Cardiovascular
√
×
×
√
√
Diabetes
√
√
×
√
√
Oncology
√
×
×
×
√
Dermatology
×
×
×
√
√
Orthopedic
×
×
×
×
√
Respiratory
×
×
×
√
√
Hepatitis
√
√
×
×
×
Immunology
√
×
×
×
×
Lipid Mgmt
√
×
×
√
×
Ophthalmology
√
×
×
√
×
Virology
√
×
×
×
×
Hormonal Treatment
√
×
√
√
×
Anti-infective
√
×
×
√
√
Urology
√
√
×
×
×
Stomatolosy
×
×
×
√
×
Nutritional
√
√
√
√
√
Source: Company, Angel Research
(√ indicates presence in the therapeutic segment and × indicates absence in the therapeutic
segment )
January 14, 2012
8
Advisory Desk
Abbott India
Impact of the new drug pricing policy
The New Pharmaceutical Pricing Policy (NPPP) draft note released by Department
of Pharmaceutical in 2011 is set to replace the Drug Policy of 1994. This new
policy is based on the revised National List of Essential Medicines (NLEM) released
in 2011, which includes 348 drugs instead of 74 drugs previously.
Following are the three key principles of the policy:
Essentiality of drugs: The policy would include drugs listed in NLEM 2011,
prepared on the basis of essentiality of drugs, rather than market share
principle implemented earlier
Market-based pricing (MBP): As per the policy, ceiling price would be decided
on the basis of Weighted Average Price (WAP) of the top three brands in the
segment. Price hikes would be allowed on an annual basis (on April 1) to the
limit of change in Wholesale Price Index (WPI) for manufactured goods. In
case of a decline in WPI, a corresponding reduction in the ceiling price would
be obligatory.
Control of formulation prices only: According to this principle, only the prices
of formulation would be under control, rather than the bulk drugs and its
formulations in the previous policy.
A higher number of drugs in the ambit of price control could hinder the profitability
of the company.
January 14, 2012
9
Advisory Desk
Abbott India
Company background
AIL is a 50.44% subsidiary of Abbott Capital India Ltd., UK, which is a subsidiary
of Abbott Laboratories, USA. The company has a strong distribution network with
18 distribution points, which caters to 11,000 stockists and 70,000 retailers. AIL
had over 1,747 employees as on December 2010 and a formulation facility at
Verna, Goa.
The company caters to five main segments, as follows:
Primary care: This segment mainly caters to pain management and
gastroenterology drugs with brands such as Brufen, Cremaffin, Cremahep, Surbex
and Ganaton.
Specialty care: This segment comprises therapeutic segments such as metabolics,
thyroid, diabetes and CNS with brands like Thyronorm, Zolfresh and Obimet.
Hospital care: This segment deals in anesthesiology and neonatology drugs,
including Forane, Sevorane, Survanta, Anatol IV and Pediasure.
Consumer healthcare (OTC): The OTC segment consists of Digene, a market
leader for antacids in India since the past six decades with a market share of 35%.
In August 2010, the company launched Digene Fastmelt, a line extension of
Digene.
Super speciality care: The company has forayed into the hepatic care sector in
2010 with the launch of the brand Heptral, a leading international
hepatoprotector. It is the first and only brand of Ademetionine (SD4 salt) approved
in India by DCGI.
Synergies with SPIL will take the company to leadership position in the
gastroenterology segment with the addition of products such as Duphalac, Creon
and Udiliv. AIL will also gain access to the growing women’s health segment
through Solvay’s branded portfolio comprising Duphaston and Duvadilan. In
addition, the company would strengthen its position in the CNS arena with the
addition of Vertin, a market leader in the vertigo segment.
January 14, 2012
10
Advisory Desk
Abbott India
Industry
The Indian pharmaceutical Industry (IPI) is globally the third largest producer of
medicines by volume, with a production turnover of over `1lakh crore in 2009-10,
comprising about `62,055cr of the domestic market and `46,787cr of exports. In
terms of value, the IPI stands at the 14th position globally due to low-price Indian
medicines.
Exhibit 12: Composition of total domestic sales
Source: AIOCD, CRISIL , Angel Research
The pharmaceutical industry is divided into two major segments - acute therapy
segment and chronic therapy segment.
The acute therapy segment includes therapeutic segments such as anti-infectives,
gastroenterology, pain management and analgesic, which are commoditized in
nature.
The chronic therapy segment includes specialized segments such as diabetes,
cardiovascular, CNS, dermatology and oncology.
The Indian pharmaceutical industry grew at a rate of 16.5% yoy in CY2010 on the
back of increasing per capita income, growing health insurance penetration, better
health awareness, higher government expenditure, increase in chronic diseases,
innovative product launches due to product patents and expanded healthcare
access to rural and semi urban markets, aided by the projected annual GDP
growth of ~7% in the coming years.
As per PwC, the Indian pharmaceutical market is expected to post a CAGR of
15-20% over CY2010-15E. Rural markets present a huge opportunity for the
pharmaceutical market since the current penetration rate stands at 17%.
January 14, 2012
11
Advisory Desk
Abbott India
AIL is a leader in the gastroenterology segment which contributes ~14% to total
domestic sales with a 13.4% CAGR over CY2008-10.
Exhibit 13: Domestic formulation sales by therapeutic segments
7500
6000
4500
3000
1500
0
CY2008
CY2009
CY2010
Source: CRISIL, Angel Research
In CY2010, the chronic segment grew by 19% yoy, whereas the acute segment
grew by 15.7% yoy. According to CRISIL estimates, this trend in the domestic
formulation segment is expected to continue because of changing lifestyles of the
working population, higher stress levels and unhealthy eating habits, which are
leading to increasing incidences of lifestyle diseases in India.
January 14, 2012
12
Advisory Desk
Abbott India
Profit and loss Account
Y/E December (` cr)
CY2008
CY2009
CY2010
CY2011E
CY2012E
CY2013E
Gross sales
705
800
1,043
1,534
1,753
2001
Less: Excise duty
9
6
6
18
19
22
Net Sales
696
795
1,037
1,516
1,734
1,979
Total operating income
696
795
1,037
1,516
1,734
1,979
% chg
11.8
14.2
30.5
46.2
14.4
14.1
Net Raw Materials
455
504
647
848
978
1,113
Other Mfg costs
5
7
10
14
16
18
Power & Fuel costs
6
5
7
9
10
12
Personnel
46
60
108
179
182
198
Other
109
121
196
270
309
356
Total Expenditure
620
697
967
1,319
1,495
1,696
EBITDA
76
97
69
197
239
283
% chg
(7.4)
28.7
(28.7)
183.2
21.8
18.0
(% of Net Sales)
10.9
12.2
6.7
13.0
13.8
14.3
Depreciation& Amortisation
7
9
11
15
16
18
EBIT
69
88
58
181
223
265
% chg
(9.7)
28.7
(34.1)
212.0
23.0
18.7
(% of Net Sales)
9.9
11.1
5.6
12.0
12.9
13.4
Interest & other charges
-
-
-
-
-
-
Other Income
26
29
36
20
45
61
(% of Net Sales)
3.7
3.7
3.5
1.3
2.6
3.1
PBT
94
117
94
201
268
326
% chg
(7.4)
24.4
(19.8)
113.7
33.4
21.6
Tax
31
40
33
66
89
108
(% of PBT)
33.3
33.9
35.2
33.0
33.0
33.0
PAT (reported)
63
78
61
135
180
219
ADJ. PAT
63
78
61
135
180
219
% chg
(9.0)
28.3
(21.4)
120.8
33.4
21.6
(% of Net Sales)
9.0
9.8
5.9
8.9
10.4
11.1
Basic EPS (`)
44.3
56.8
44.6
63.4
84.6
102.9
Fully Diluted EPS (`)
44.3
56.8
44.6
63.4
84.6
102.9
% chg
(3.7)
28.3
(21.4)
42.1
33.4
21.6
Note: CY2008 and 2009 are November ending. CY2011-13E are merged with SPIL
January 14, 2012
13
Advisory Desk
Abbott India
Balance Sheet
Y/E December (` cr)
CY2008
CY2009
CY2010 CY2011E
CY2012E CY2013E
SOURCES OF FUNDS
Equity Share Capital
14
14
14
21
21
21
Reserves& Surplus
208
258
292
545
680
854
Shareholders’ Funds
221
272
305
566
702
876
Total Loans
1
-
-
-
-
-
Deferred Tax Liability (Net)
4
2
-
(2)
(2)
(2)
Total Liabilities
226
274
306
564
699
873
APPLICATION OF FUNDS
Gross Block
99
107
118
199
219
240
Less: Acc. Depreciation
51
58
69
110
127
144
Net Block
48
49
50
88
92
96
Capital Work-in-Progress
3
-
1
1
1
1
Goodwill
-
-
-
-
-
-
Investments
-
-
-
37
37
37
Current Assets
300
339
403
661
822
1026
Cash
164
176
189
330
444
594
Loans & Advances
12
17
20
48
55
63
Inventory
92
102
129
201
230
263
Debtors
32
44
65
80
92
105
Current liabilities
125
114
148
223
252
286
Net Current Assets
175
225
255
438
570
739
Misc. Exp. not written off
-
-
-
-
-
-
Total Assets
226
274
306
564
699
873
Note: CY2008 & 09 are Nov ending. CY11- 13E are merged with SPIL
January 14, 2012
14
Advisory Desk
Abbott India
Cash Flow Statement
Y/E December (` cr)
CY2008 CY2009 CY2010 CY2011 CY2012E CY2013E
Profit before tax
94
117
94
201
268
326
Depreciation
7
9
11
15
16
18
Change in Working Capital
22
(37)
(18)
(41)
(18)
(19)
Other income
(26)
(26)
(29)
(36)
(20)
(45)
Direct taxes paid
(31)
(40)
(33)
(66)
(89)
(108)
Others
21
17
27
-
-
-
Cash Flow from Operations
66
23
25
73
158
172
(Inc.)/Dec. in Fixed Assets
(20)
(6)
(12)
(18)
(20)
(22)
(Inc.)/Dec. in Investments
150
-
-
(37)
-
-
Other income
26
29
36
20
45
61
Others
(15)
(25)
(40)
-
-
-
Cash Flow from Investing
140
(2)
(16)
(35)
25
39
Issue of Equity
(1)
-
-
-
-
-
Inc./(Dec.) in loans
(0)
(1)
-
-
-
-
Dividend Paid (Incl. Tax)
(22)
(27)
(27)
(42)
(45)
(45)
Others
(58)
5
(0)
79
-
-
Cash Flow from Financing
(81)
(23)
(27)
37
(45)
(45)
Inc./(Dec.) in Cash
146
12
13
*142
113
150
Opening Cash balances
17
164
176
189
330
444
Closing Cash balances
164
176
189
330
444
594
Note: CY2008 & 09 are Nov ending. CY11- 13E are merged with SPIL; *includes previous years
cash of SPIL
January 14, 2012
15
Advisory Desk
Abbott India
Key Ratio’s
Y/E December
CY2008
CY2009
CY2010
CY2011
CY2012E
CY2013E
Valuation Ratio (x)
P/E (on FDEPS)
50.3
39.2
49.9
22.6
16.9
13.9
P/CEPS
49.4
63.4
52.9
20.3
15.5
12.9
P/BV
13.8
11.2
10.0
5.4
4.3
3.5
Dividend yield (%)
1.0
1.2
1.2
1.2
1.3
1.3
EV/Sales
4.1
3.6
2.8
1.8
1.5
1.2
EV/EBITDA
38.2
29.5
41.2
13.6
10.7
8.5
EV / Total Assets
13.0
10.6
9.4
4.7
3.6
2.7
Per Share Data (`)
EPS (Basic)
46.0
56.7
44.6
63.4
84.6
102.9
EPS (fully diluted)
44.3
56.8
44.6
63.4
84.6
102.9
Cash EPS
49.4
63.4
52.9
70.5
92.2
111.2
DPS
14.0
17.0
17.0
17.0
18.0
18.0
Book Value
161.8
198.6
223.3
266.6
330.2
412.1
DuPont Analysis
EBIT margin
10.9
12.2
6.7
12.0
12.9
13.4
Tax retention ratio
0.7
0.7
0.6
0.7
0.7
0.7
Asset turnover (x)
11.6
10.5
9.8
7.5
7.7
8.0
RoIC (Post-tax)
84.0
84.7
42.5
59.8
66.5
71.4
Cost of Debt (Post Tax)
1.5
34.8
-
-
-
-
Leverage (x)
(0.7)
(0.7)
(0.6)
(0.6)
(0.7)
(0.7)
Operating RoE
169.1
193.5
-
-
-
-
Returns (%)
RoCE (Pre-tax)
33.3
39.3
24.0
41.2
34.9
33.4
Angel RoIC (Pre-tax)
126.0
128.3
65.6
115.4
106.7
114.3
RoE
26.8
31.5
21.2
30.9
28.4
27.7
Turnover ratios (x)
Asset TO (Gross Block)
7.8
7.7
9.2
9.6
8.3
8.6
Inventory / Sales (days)
47
45
41
40
45
45
Receivables (days)
16
18
19
19
19
19
Payables (days)
64
63
49
62
62
62
WC (ex-cash) (days)
12
14
20
21
25
25
Solvency ratios (x)
Net debt to equity
(0.7)
(0.6)
(0.6)
(0.6)
(0.7)
(0.7)
Net debt to EBITDA
(2.2)
(1.8)
(2.7)
(1.9)
(2.0)
(2.2)
Interest Cov. (EBIT / Int.)
3777
485
1734
9071
-
-
Note: CY2008 & 09 are Nov ending. CY11- 13E are merged with SPIL
January 14, 2012
16
Advisory Desk
Abbott India
Research Team Tel: 022 - 39357800
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
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Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
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connection with the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
investment positions in the stocks recommended in this report.
Disclosure of Interest Statement
Abbott India Ltd.
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Reduce (-5% to 15%)
Sell (< -15%)
January 14, 2012
17