Novartis India: agrochemical spin off will improve numbers - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  
  • Home
  • Outlook Arena
  • May 24, 2000 - Novartis India: agrochemical spin off will improve numbers

Novartis India: agrochemical spin off will improve numbers

May 24, 2000

Novartis India is a 50.99% subsidiary of the Novartis Switzerland, the world leader in pharmaceuticals and agrochemicals. The company has 5 brands that contribute almost 45% of its formulation sales

Major formulations % Pharma
Sales (approx)
Voveran (NSAIDs) 17.0%
Otrivin (Nasal decongestation) 5.0%
Tegrital (anti–epileptic) 12.0%
Rimactizid (anti–TB) 6.0%
Macalvit (calcium Supplement) 5.0%

The international parent has proposed the separation of its agrochemical arm and its merger with the agrochemical arm of Astra Zeneca to form a new company Syngenta. In India too the same process is underway. This is similar to the move that Wockhardt India has made in India i.e. separating its agrochemical arm and becoming a focused pharma company.

Healthcare (this includes the vision care division and the animal health division) contributes approx. 50% of the Novartis total turnover. The overall operating margins of the company are around 17% and these can be expected to increase to around 22% post the hive off of the agrochemical division. Also, the company would be able to reduce its working capital requirements since the inventory days and debtors days can almost be halved from the present levels of 70 days and 55 days respectively.

New Products Purpose
Femara for treatment of advanced breast cancer
Exelon for management of Alzheimer's disease
Epitril for treatment of epilepsy and panic disorders
PZA–1000 for treatment of TB
3FD for treatment of TB

Thus the spin off would leave Novartis India with a stable non–seasonal business (since for agro–chemical business, the first half is normally much better than the second half). Besides, the company has launched five new products over the last two years (see table) all of which are out of the purview of the Drug Price Control Order. This can be expected to improve the margins further.

The improvement in profits, the removal of a seasonal business, the introduction of new products coupled with the almost zero debt status of the company should spell good times for the company. The stock quotes at Rs 618 (52 week range: 1436/618) an earning multiple of 26 times its FY99 earnings.

Equitymaster requests your view! Post a comment on "Novartis India: agrochemical spin off will improve numbers". Click here!


More Views on News

5 Stocks to Watch Out for Amid the Omicron Outbreak (Views On News)

Dec 3, 2021

As the new variant of Covid-19 emerges, keep an eye on these stocks.

This Stock Just Made a Historical Debut on the Exchanges (Views On News)

Nov 15, 2021

Shares of the company listed at premium of 253% from its IPO price, the highest ever.

3 Indian Pharma Companies that are Investing Big Time for the Future (Views On News)

Nov 9, 2021

In 2021, R&D of pharma companies roared to life in a never-before-seen way.

Demerger of Financial & Pharma Businesses puts Piramal Enterprises in Limelight (Views On News)

Oct 8, 2021

The company's shareholders will be issued 4 shares in the demerged entity for every 1 held in Piramal Enterprises.

Block Deal Disappoints Max Healthcare Shareholders. Stock Falls 6% (Views On News)

Sep 30, 2021

The divestment of 6.6% stake by the promoter is considered to be one of the largest block deals of the market.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 7, 2021 (Close)


  • Track your investment in NOVARTIS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks