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  • May 27, 2000 - German Remedies: Impressive results, attractive valuation

German Remedies: Impressive results, attractive valuation

May 27, 2000

German Remedies (GRL) has outpaced the domestic formulation growth of 9.8% and reported a 19% growth in net profit on the back of an 11.7% growth in the topline.

(Rs m) FY99 FY00 Change
Sales 1,999 2,232 11.7%
Other Income 28 29 1.2%
Expenditure 1,589 1,773 11.6%
Operating Profit (EBDIT) 410 459 12.0%
Operating Profit Margin (%) 20.5% 20.6%  
Interest 18 14 -23.6%
Depreciation 48 64 31.4%
Profit before Tax 372 411 10.3%
Other Adjustments   (7)  
Tax 100 80 -20.0%
Profit after Tax/(Loss) 272 324 19.0%
Net profit margin (%) 13.6% 14.5%  
Earnings per share (Rs) 33 39  

GRL is owned by a group of German drug companies Boehringer Ingelheim, Asta Medica, Schering, Beecham Wolfing, Heller Vernog and Chemiework. The highest shareholding is that of Asta Medica which currently owns over 20% of the company's equity. Asta Medica specialises in oncology (anti–cancer) and respiratory drugs. Over the last two years GRL has introduced 12 new formulations and discontinued 4 products. These products have been the key drivers of topline growth. It's main products include Deriphyllin (for bronchitis), Dulcolax (laxatives), Primolut N and Proluton (both for hormonal imbalances). All these brands are within the top 250 brands of ORG and contribute over 25% to the company's turnover.

The share quotes at a price of Rs 612 which implies an earning multiple of 15.7 times. The current earning multiple is almost half the multiple at what the stock quoted last year.

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