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http://www.icicidirect.com/mailimages/ICICIdirect_ConsolidatedResultPreview_Q4FY12E.pdf
Pharmaceuticals
ƒ Consolidated topline to grow at ~15% YoY
The pharma companies under the I-Direct coverage are expected to
post steady growth of ~15% to | 12642 crore on the back of new niche
product launches and a favourable rupee (~11% YoY) movement.
Excluding Biocon’s Axicorp divestment (| 232 crore) and Strides’ Ascent
divestments (~| 175 crore) in Q4FY11, the like to like growth is
expected to be ~20%. Companies like Glenmark, Lupin and Sun are
expected to register healthy growth in sales driven by incremental
launches in the US and emerging markets. Divi’s Labs and Jubilant are
also expected to register good numbers on account of a revival in
CRAMS. Cadila is expected to post lower sales growth on account of
slowdown in consumer business. Similarly, Aurobindo is also expected
to post lower growth due to lesser product launches in the US market.
ƒ EBITDA to grow ~40% YoY
We expect the EBIDTA of the coverage universe to witness robust
growth of ~40% YoY to | 3042 crore due to factors like 1) weeding out
of one-time provisions in Q4FY11, 2) possible write-back of MTM
provisions by players like Glenmark and 3) sharp improvement in
profitability of Taro (Sun).
ƒ Net profit to post robust growth of 29% YoY
We expect the net profit of the coverage universe to post robust growth
of ~29% YoY to | 2193 crore on the back of 1) higher EBITDA and 2)
partial reversal of MTM losses, which was booked in Q3FY12.
Company specific view
Company Remarks
Aurobindo
Pharma
Aurobindo’s sales are expected to grow 9% YoY on the back of growth in the EU
formulation business. EBITDA margins will remain under pressure due to higher
spends on corrective measures and power cost. We expect the company to write
back | 70 crore of MTM losses, booked in earlier quarters
Biocon We expect sales (ex-AxiCorp) to grow just 10% YoY due to absence of licensing
income as Pfizer exited the Biosimilar deal. Biopharma and CRAMS will grow by 15%
and 20%, respectively. EBITDA margins are expected to improve by ~440 bps YoY
due to the exit from low margin AxiCorp
Cadila
Healthcare
Cadila is expected to post marginal growth of ~9% in revenues YoY on a higher base
of Q4FY11, which was inflated to achieve the US$1 billion landmark. US formulations
are expected to grow 20% YoY on the back of product launches. EBITDA margins are
expected to grow 80 bps YoY
Divi's
Laboratories
We expect Divi’s to register sales growth of 18% YoY on the back of traction from
both APIs and Custom Synthesis. EBITDA margins are expected to decline ~400 bps
YoY on the back of commissioning of the fourth manufacturing facility at
Vishakhapatnam
Elder Pharma We expect overall sales to grow ~15% YoY driven by higher growth in women
healthcare and anti-infective segments. We expect Biomeda and NeutraHealth to
continue to post muted growth in sales. EBITDA margins are expected to decline by
50 bps YoY on the back of a rise in raw material cost
Glenmark
Pharma
Glenmark’s sales are expected to grow ~23% YoY on account of 35% growth in the
US generic business. Despite the restructuring exercise, we expect 25% growth in
domestic formulations on the back of suppressed base of Q4FY11. We expect
Glenmark to clock EBITDA margins of 21.5% in the current quarter
Indoco
Remedies
We expect Indoco to post sales growth of 15% YoY on the back of a recovery in
domestic formulations (12% growth) and healthy growth of 21% in exports
formulations. EBITDA margins are expected to remain flat at 14.4% on the back of a
rise in the employee cost YoY
Ipca laboratories We expect Ipca to clock sales growth of ~11% YoY on account of ~12% growth in
domestic formulations. We expect EBITDA margins to increase ~160 bps YoY on a
lower base and improvement in realisation. We expect the company to book forex
gains of | 20 crore
Jubilant Life
Sciences
Jubilant Life Sciences is expected to post ~20% revenue growth on the back of 22%
growth in the products business. In the products business, we expect generic sales to
grow 60%. We expect JLS to book forex gains of | 50 crore
Lupin Lupin is expected to clock revenue growth of ~24% YoY, driven by launch of
Ziprasidone and growth in advanced markets. Excluding Ziprasidone, we expect the
base business to grow at 16% YoY. EBITDA margins are expected to increase by 150
bps YoY
Natco Pharma We expect Natco sales to grow by 17% YoYon the back of strong 30% growth in
domestic oncology and 17% growth in APIs. EBITDA margins are expected improve
170 bps on the back of recovery in high margin domestic oncology business
Opto Circuits We expect Opto Circuits’ sales to grow ~19% YoY driven by 20% growth in the
invasive segment. EBITDA margins are expected to increase by ~400 bps YoY to 27%
due to improved margins at Cardiac Science. However, net profit is expected to post
moderate growth of 12% due to higher tax
Source: Company, ICICIdirect.com Research
: Company specific view
Strides Arcolab We expect revenues of Strides to decline ~7% YoY as it exited Ascent Pharma.
EBITDA margins are expected to increase by 600 bps. We also expect the company
to book one-time profit of ~| 800 crore due to sale of Ascent Pharma
Sun Pharma We expect Sun’s sales to increase 34% YoY on the back of strong growth in Taro.
Domestic formulations are expected to grow 18% YoY. We expect Sun to clock
US$10 million sales from Lipiodox. EBITDA margins are expected to increase ~810
bps YoY due to improved profitability at Taro
Torrent Pharma Torrent’s topline is expected to grow ~17.6% YoY on the back of robust growth
(300%) in the US formulation business on the back of low base and 15% growth in
Brazilian sales. However, we expect the domestic formulation business to grow just
~10% YoY
Unichem Labs We expect Unichem to post ~25% YoY growth in sales on the back of lower base and
addition of new products in the CRAMS business. We expect export formulation sales
to increase 90% YoY. EBITDA margins are expected to increase by 425 bps on the
back of lower base of Q4FY11
Source: Company, ICICIdirect.com Research
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