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Piramal Healthcare (PHL) reported dismal 2QFY2011 results impacted by the transition of
the domestic formulation business to Abbott during the quarter. Net sales came in at
`731cr (`1,000cr), down 26.9% yoy and lower than our estimates of `849cr. The CRAMS
business continued to be under pain with a 21.0% decline in sales to `214cr (`270cr),
while the global critical care business declined by 27.7% to `64cr (`89cr). The company
reported operating loss of `33cr (profit of `177cr), marred by one-off expenses pertaining
to the sale of business to Abbott. PHL reported one-time income of `16,224cr on sale of
business, which boosted overall net profit to `12,540cr.
Piramal has announced the buy-back of shares instead of the earlier expectation of
one-time special dividend. The buy-back of shares would be at `600 per share and open
for all the shareholders, including the promoters. The cash on books post the closure of the
open-offer, tax and debt payments is expected to be in range of `3,500cr–4,000cr (by the
end of FY2011). The company has not yet decided on the new business for the deployment
of cash. We maintain Neutral on the stock.
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