Aventis Pharma has reported 5.8% YoY growth in topline during year ended December 2003. The bottomline growth was much faster at 61% YoY. Aventis clocked a 9.6% topline and a significant 81% bottomline growth during the quarter ended December. Let's take a detailed look at the financial performance of the company.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (m)
Earnings per share (Rs)*
The growth in the topline of the company in December quarter was in line with the industry growth. Some of the power brands of the company such as Cardace, Targocid, Combiflam, Avil and Soframycin fuelled the growth in the topline. These brands also continued to maintain the leadership in their respective segments. First half of the year 2003 was sluggish in growth terms for the whole pharma industry. Despite this, the performance of Aventis is commendable owing to strong bottomline growth.
Cost Break Up
As a % of sales
A look at the table above reveals that a lot of this cost efficiency has been contributed by the shrinking of raw material costs as a percentage of sales. This also indicates a shift in the company's product profile towards higher margin products.
Continuing with its strategy of aggressive new product launches from its parent's product
portfolio, Aventis Pharma introduced 'Lantus', the world's only 24-hour basal insulin in the anti–diabetics segment in the first half of the year. Considering that the new patent regime is going to be implemented from 2005, more such launches seems to be on anvil. These launches are likely to be one of the major growth drivers for the company going forward.
At Rs 667 Aventis Pharma is trading at a P/E of 15.6x FY04 earnings. With the new patent regime coming likely to come into force just 9 months from now, the company's aggressive new product launches and the resultant new product portfolio, declining DPCO cover and focus on lifestyle segments, we remain positive about the long-term prospects of the company. However, although Aventis Pharma has been successfully charging a premium for its products, the sustainability of the same in view of the rising competition in the domestic market remains a concern.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407