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Brands driven growth
Wyeth Q4FY12 results were better than our expectations. The company
reported 25%YoY sales growth against the industry’s 15%. The results of the
two quarters are not comparable as the previous quarter was 4m period
ending 31st March’11. Wyeth’s EBIDTA margin declined by 270bps YoY from
38.2% to 35.5% due to an increase in material cost and other expenses. The
company’s other income grew by 28%YoY from Rs60mn to Rs77mn. Wyeth’s
tax rate has come down from 32.6% to 30.5% of PBT. Net profit grew by
23%YoY. Wyeth has cash per share of Rs160. We have retained Buy rating for
the scrip with a target price of Rs1353 (based on15x FY14E EPS of Rs90.2).
Strong revenue growth: During the quarter, the pharma business (94% of
revenues) grew by 26%YoY from Rs1.19bn to Rs1.50bn. OTC business (6%
revenues) grew by 12% from Rs80mn to Rs89mn.
Margin under pressure: Wyeth reported 270bps drop in EBIDTA margin from
38.2% to 35.5% due to the increase in material cost and other expenses.
Wyeth’s material cost increased by 180bps from 32.6% to 34.4% of revenues
due to the increase in cost of imported raw materials, with the depreciation of
rupee. Other expenses grew by 240bps from 22.7% to 25.1% due to higher
marketing expenses. The PBIT margin of pharma business dropped by 40bps
YoY from 38.1% to 37.7%. PBIT margin of OTC declined by 3160bps from
19.2% to (-)12.4%
Brands doing well: Four out of six leading brands of Wyeth reported a
growth rate higher than market growth of 15%. These are, Mucaine – antacid
20.7%, Ovral – L oral contraceptive 39.1%, Ativan – sedative 15.6% and
Prevenar 13 – pnemonia vaccine 137.1%.
Excellent growth of Prevenar 13: As per IMS MAT-Mar’12 data, Prevenar 13,
the company’s pneumococcal vaccine has reported annual sales of Rs330mn
and a growth rate of 137.1% in the domestic market. This is despite stiff
competition from Synflorix of Glaxo SK Pharma, which was launched in Dec’11
at around half the price of Prevenar.
Attractive valuations, Reiterate Buy: We expect Wyeth to report good
growth in the domestic market due to its strong brands and its leading
position in oral contraceptives (OC) and vaccines. We have revised the EPS
estimates upwards by 9% for FY13 and 7% for FY14. At the CMP of Rs854, the
stock trades at 11.2x FY13E EPS of Rs75.9 and 9.5x FY14E EPS of Rs90.2. We
reiterate the Buy rating for the scrip with a target price of Rs1353 (based on
15x FY14 earnings).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Brands driven growth
Wyeth Q4FY12 results were better than our expectations. The company
reported 25%YoY sales growth against the industry’s 15%. The results of the
two quarters are not comparable as the previous quarter was 4m period
ending 31st March’11. Wyeth’s EBIDTA margin declined by 270bps YoY from
38.2% to 35.5% due to an increase in material cost and other expenses. The
company’s other income grew by 28%YoY from Rs60mn to Rs77mn. Wyeth’s
tax rate has come down from 32.6% to 30.5% of PBT. Net profit grew by
23%YoY. Wyeth has cash per share of Rs160. We have retained Buy rating for
the scrip with a target price of Rs1353 (based on15x FY14E EPS of Rs90.2).
Strong revenue growth: During the quarter, the pharma business (94% of
revenues) grew by 26%YoY from Rs1.19bn to Rs1.50bn. OTC business (6%
revenues) grew by 12% from Rs80mn to Rs89mn.
Margin under pressure: Wyeth reported 270bps drop in EBIDTA margin from
38.2% to 35.5% due to the increase in material cost and other expenses.
Wyeth’s material cost increased by 180bps from 32.6% to 34.4% of revenues
due to the increase in cost of imported raw materials, with the depreciation of
rupee. Other expenses grew by 240bps from 22.7% to 25.1% due to higher
marketing expenses. The PBIT margin of pharma business dropped by 40bps
YoY from 38.1% to 37.7%. PBIT margin of OTC declined by 3160bps from
19.2% to (-)12.4%
Brands doing well: Four out of six leading brands of Wyeth reported a
growth rate higher than market growth of 15%. These are, Mucaine – antacid
20.7%, Ovral – L oral contraceptive 39.1%, Ativan – sedative 15.6% and
Prevenar 13 – pnemonia vaccine 137.1%.
Excellent growth of Prevenar 13: As per IMS MAT-Mar’12 data, Prevenar 13,
the company’s pneumococcal vaccine has reported annual sales of Rs330mn
and a growth rate of 137.1% in the domestic market. This is despite stiff
competition from Synflorix of Glaxo SK Pharma, which was launched in Dec’11
at around half the price of Prevenar.
Attractive valuations, Reiterate Buy: We expect Wyeth to report good
growth in the domestic market due to its strong brands and its leading
position in oral contraceptives (OC) and vaccines. We have revised the EPS
estimates upwards by 9% for FY13 and 7% for FY14. At the CMP of Rs854, the
stock trades at 11.2x FY13E EPS of Rs75.9 and 9.5x FY14E EPS of Rs90.2. We
reiterate the Buy rating for the scrip with a target price of Rs1353 (based on
15x FY14 earnings).
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