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R e s u l t s i n l i n e , m a r g i n p r e s s u r e p e r s i s t s …
Elder Pharmaceutical’s Q2FY12 results were in line with our estimates. On
a like-to-like basis, the results are not comparable as the company
increased its stake in Biomeda and completed the acquisition of
NeutraHealth. Net sales increased by 57.2% YoY to | 331.1 crore in line
with our expectation of | 327 crore, driven by growth across therapies.
Excluding sales from Biomeda and NeutraHealth, the standalone sales
increased by 24% YoY to | 252.8 crore. Therapies like women’s
healthcare, neutraceuticals, anti-infectives, lifestyle diseases and pain
management posted growth of 18.9%, 19%, 16%, 20% and 30%,
respectively. EBITDA margins declined 330 bps YoY to 16.5% mainly due
to consolidation of Biomeda and NeutraHealth. Both depreciation and
interest cost increased by 21% to | 9 crore and 42% to | 21.2 crore,
respectively, on the back of commission of the Cephalosporin block at the
Langa road facility and hike in lending rates. Thanks to lower tax rate of
24.4%, the net profit grew by 41.5% to | 19.4 crore. We have increased
the target price on the back of an upbeat performance.
ƒ Plans to launch eight products in second half
The company launched four drugs during the quarter taking the total
product launches in the first half to eight. It is planning to launch
eight to 10 products in the second half.
ƒ New proposed pricing policy not to have much impact
Currently, Elder’s two brands are in the DPCO list, which accounted
for 4-5% of total sales. As per the proposed new pricing policy,
around 6-7% of total sales will come under the purview of price
control. According to the management, the Shelcal group (annual
sales: ~| 160-180 crore) would not come under the new proposed
pricing policy as calcium carbonate from oyster shell has not been
covered in pricing list while plain Calcium carbonate is covered.
V a l u a t i o n
We expect Elder’s sales and PAT to grow at a CAGR of 24.7% and 39.8%,
respectively, during FY11-13E. Other than leading legacy brands, the
performances of Biomeda and NeutraHealth will weigh on valuations. We
have ascribed a target price of | 428, based on 7x FY13E EPS of | 61.1.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
R e s u l t s i n l i n e , m a r g i n p r e s s u r e p e r s i s t s …
Elder Pharmaceutical’s Q2FY12 results were in line with our estimates. On
a like-to-like basis, the results are not comparable as the company
increased its stake in Biomeda and completed the acquisition of
NeutraHealth. Net sales increased by 57.2% YoY to | 331.1 crore in line
with our expectation of | 327 crore, driven by growth across therapies.
Excluding sales from Biomeda and NeutraHealth, the standalone sales
increased by 24% YoY to | 252.8 crore. Therapies like women’s
healthcare, neutraceuticals, anti-infectives, lifestyle diseases and pain
management posted growth of 18.9%, 19%, 16%, 20% and 30%,
respectively. EBITDA margins declined 330 bps YoY to 16.5% mainly due
to consolidation of Biomeda and NeutraHealth. Both depreciation and
interest cost increased by 21% to | 9 crore and 42% to | 21.2 crore,
respectively, on the back of commission of the Cephalosporin block at the
Langa road facility and hike in lending rates. Thanks to lower tax rate of
24.4%, the net profit grew by 41.5% to | 19.4 crore. We have increased
the target price on the back of an upbeat performance.
ƒ Plans to launch eight products in second half
The company launched four drugs during the quarter taking the total
product launches in the first half to eight. It is planning to launch
eight to 10 products in the second half.
ƒ New proposed pricing policy not to have much impact
Currently, Elder’s two brands are in the DPCO list, which accounted
for 4-5% of total sales. As per the proposed new pricing policy,
around 6-7% of total sales will come under the purview of price
control. According to the management, the Shelcal group (annual
sales: ~| 160-180 crore) would not come under the new proposed
pricing policy as calcium carbonate from oyster shell has not been
covered in pricing list while plain Calcium carbonate is covered.
V a l u a t i o n
We expect Elder’s sales and PAT to grow at a CAGR of 24.7% and 39.8%,
respectively, during FY11-13E. Other than leading legacy brands, the
performances of Biomeda and NeutraHealth will weigh on valuations. We
have ascribed a target price of | 428, based on 7x FY13E EPS of | 61.1.
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