Knoll Pharmaceuticals, (now a subsidiary of Abott Labs) has registered a marginal decline in sales for 1QFY03. However, a sharp rise in operating margins helped the company register a 53% rise in profits. Knoll Pharma is a leading player in the domestic insulin, anti-diabetic, pain control and antacid market.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Diluted Earnings per share*
P/E (at current price)
The rise in operating margins is on account of two reasons. The current year's financials received a boost on account of upward revision in prices of four formulations of insulin by NPPA last September. Secondly, last year, the company profits dipped following a cut in Ibuprofen prices by NPPA. Ibuprofen is a bulk drug used in pain management segment. As Knoll Pharma is a market leader in Ibuprofen market, the price cut had a severe impact on the company's financials in 1QFY02.
Knoll Pharmaceuticals Ltd had recently announced the buyback of 919,000 fully paid up equity shares from the existing shareholders through a tender offer at a price of Rs 350 per share. This represents around 14% of the free float of the company. However, pending certain regulatory approvals from SEBI, the buyback stands annulled for the time being. The latest available shareholding pattern is as follows:
The stock is currently trading at a P/e multiple of 9x FY02 earnings, a 16% discount to its proposed open offer price. The stock trades at considerable discount to its peers. Knoll Pharma’s financials are expected to look up in the short term, mirroring the Insulin price revision. However, in the long term competition is expected to set in quickly, threatening the leadership position of the company. Lot of domestic players like Glenmark, Wockhardt and Shanta Bio-tech already have clear plans to enter the insulin market. Considering the size and price of the proposed buyback offer, the stock price is expected to remain range bound in the near term.
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407