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G o o d s h o w d e s p i t e m a r g i n p r e s s u r e …
Elder Pharma’s Q1FY12 results were in line with our expectations. The
results are not comparable both YoY and QoQ as it increased its stake in
Biomeda and complete the acquisition of NeutraHealth. Net sales grew
54% YoY to | 299.7 crore, almost in line with our expectation of | 311
crore. The combined sales of Biomeda and NeutraHealth during the
quarter were | 76.1 crore. Excluding this, base business grew 15% YoY to
| 223.6 crore, in line with our expectation of | 230 crore. EBITDA margins
declined by 210 bps YoY to 17.3% as both Biomeda and NeutraHealth are
making a loss at the EBITDA level. Depreciation increased by 79% to | 8.7
crore as it commissioned the Langa Road facility. We maintain our BUY
rating on the stock on the back of in line fundamentals.
ƒ Break even of Biomeda and NeutraHealth to improve profitability
During the quarter, Biomeda registered sales of | 10 crore (| 20
crore for FY11) and loss of | 1 crore. NeutraHealth registered sales
of | 66 crore and loss of | 1 crore. Both companies are distribution
companies with very less margins. The company is planning to
improve revenues by introducing own products. It expects both
NeutraHealth and Biomeda to break even during the current fiscal.
ƒ Women’s healthcare segment sales up 18% YoY
The women’s healthcare segment posted growth of 18% during the
quarter to | 51.4 crore on the back of greater traction in the Shelcal
brand and line extensions. Sales from the Shelcal brand and line
extension for the quarter stood at ~| 44 crore. The newly launched
Shelcal K and Shelcal HD are gaining traction.
V a l u a t i o n
We expect sales and PAT to grow at a CAGR of 25% and 39% in FY11-
13E. Elder is currently trading at ~8x FY12E EPS of | 7.9 and ~6x FY13E
of | 59.9. Currently, both NeutraHealth and Biomeda are in investment
mode. We expect NeutraHealth to break even in the current fiscal. We
would revisit the multiple once this happens. We have valued the stock at
| 419, based on 7x FY13E EPS of | 59.9. We also recommend that
existing shareholders who bought the stock at | 360 at our Q4FY11 result
update hold the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
G o o d s h o w d e s p i t e m a r g i n p r e s s u r e …
Elder Pharma’s Q1FY12 results were in line with our expectations. The
results are not comparable both YoY and QoQ as it increased its stake in
Biomeda and complete the acquisition of NeutraHealth. Net sales grew
54% YoY to | 299.7 crore, almost in line with our expectation of | 311
crore. The combined sales of Biomeda and NeutraHealth during the
quarter were | 76.1 crore. Excluding this, base business grew 15% YoY to
| 223.6 crore, in line with our expectation of | 230 crore. EBITDA margins
declined by 210 bps YoY to 17.3% as both Biomeda and NeutraHealth are
making a loss at the EBITDA level. Depreciation increased by 79% to | 8.7
crore as it commissioned the Langa Road facility. We maintain our BUY
rating on the stock on the back of in line fundamentals.
ƒ Break even of Biomeda and NeutraHealth to improve profitability
During the quarter, Biomeda registered sales of | 10 crore (| 20
crore for FY11) and loss of | 1 crore. NeutraHealth registered sales
of | 66 crore and loss of | 1 crore. Both companies are distribution
companies with very less margins. The company is planning to
improve revenues by introducing own products. It expects both
NeutraHealth and Biomeda to break even during the current fiscal.
ƒ Women’s healthcare segment sales up 18% YoY
The women’s healthcare segment posted growth of 18% during the
quarter to | 51.4 crore on the back of greater traction in the Shelcal
brand and line extensions. Sales from the Shelcal brand and line
extension for the quarter stood at ~| 44 crore. The newly launched
Shelcal K and Shelcal HD are gaining traction.
V a l u a t i o n
We expect sales and PAT to grow at a CAGR of 25% and 39% in FY11-
13E. Elder is currently trading at ~8x FY12E EPS of | 7.9 and ~6x FY13E
of | 59.9. Currently, both NeutraHealth and Biomeda are in investment
mode. We expect NeutraHealth to break even in the current fiscal. We
would revisit the multiple once this happens. We have valued the stock at
| 419, based on 7x FY13E EPS of | 59.9. We also recommend that
existing shareholders who bought the stock at | 360 at our Q4FY11 result
update hold the stock
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