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Unichem: Strong growth

Jun 20, 2002

A wider therapeutic reach, increasing presence in exports and restructuring benefits have helped Unichem Labs display robust numbers for FY02. The company's margins have shown steady improvement in the last two years due to product introductions in high growth segments. The company ended FY02 with a 55% growth in net profits.

(Rs m) FY01 FY02 % change
Sales 2,190 2,689 22.7%
Other Income 27 25 -7.0%
Expenditure 1,854 2,233 20.5%
Operating Profit (EBDIT) 337 456 35.3%
Operating Profit Margin (%) 15.4% 16.9%
Interest (net) 50 45 -9.4%
Depreciation 59 66 10.3%
Profit before Tax 254 370 45.4%
Tax 22 61.86 185.1%
Extraordinary Item -34 0 -
Profit after Tax/(Loss) 199 308 55.0%
Net profit margin (%) 9.1% 11.5%
No. of Shares (eoy) (m) 8.5 8.5
Diluted Earnings per share* 23.4 36.2
P/E (at current price) 6.8
*- annualised

The company has been launching products in the high margin segments in the last two years which has helped it enhance its overall profitability margins. The company introduced eight products last fiscal. The company has identified anti-diabetes as its core area of growth going forward. Some of the products introduced include Glitase a drug used to treat diabetes, TG-tor a cholesterol reducing drug, Roff-50 a painkiller, Erix Unichem's version of Pfizer's blockbuster drug Viagra and Nutreva a Protein supplement. It plans to introduce 10 products in the current year.

Last year the company launched two new divisions - Foreva (catering exclusively to women healthcare) and Molecular Generics, which cater to the generics market. The growth drivers were tranquilisers and anti-rheumatics, which registered growth of 18% and 73.4% respectively. While tranquilisers contribute 11.4% to the total turnover, anti-rheumatics contribute around 8.5%. Cardiovascular and CNS also registered healthy growth rates. The growth in the cardiovascular segment was driven by Corvadil-A (hypotensive combinations) and Loprin (anticoagulents). Serta (antidepressant), with a growth rate of 92.9%, was the key growth driver for the CNS category. Cardiovascular and CNS together contribute around 10% to the total turnover.

Unichem is foraying in the UK through a JV with the former directors of the Bioglan group in Ireland. The company will hold a 60% stake in the JV, christened Niche Generics, while the balance 40% will be held by the foreign management team. Niche Generics will buy certain assets of the Bioglan group including the manufacturing facility in Ireland, range of product licenses (market authorisations) representing a present business of approximately 4 m pounds spread across the regulated markets of the European Union and UK. Unichem has already invested 2 m pounds and will invest another 1 m pounds to fund Niche Generics' working capital requirements.

The stock currently trades at Rs 247 at a P/E of 7x FY02 earnings. The company is trading at a discount to its peers in the industry. No doubt that the company has ventured into some high growth areas, however, competition is stiff in these segments and the company will require considerable time and resources to establish its brands here.

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More Views on News

UNICHEM LAB Announces Quarterly Results (1QFY20); Net Profit Up 102.2% (Quarterly Result Update)

Jul 30, 2019 | Updated on Jul 30, 2019

For the quarter ended June 2019, UNICHEM LAB has posted a net profit of Rs 5 m (up 102.2% YoY). Sales on the other hand came in at Rs 2 bn (up 15.4% YoY). Read on for a complete analysis of UNICHEM LAB's quarterly results.

UNICHEM LAB 2018-19 Annual Report Analysis (Annual Result Update)

Jul 4, 2019 | Updated on Jul 4, 2019

Here's an analysis of the annual report of UNICHEM LAB for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of UNICHEM LAB. Also includes updates on the valuation of UNICHEM LAB.

UNICHEM LAB Announces Quarterly Results (4QFY19); Net Profit Up 31.7% (Quarterly Result Update)

May 29, 2019 | Updated on May 29, 2019

For the quarter ended March 2019, UNICHEM LAB has posted a net profit of Rs 37 m (up 31.7% YoY). Sales on the other hand came in at Rs 3 bn (up 35.1% YoY). Read on for a complete analysis of UNICHEM LAB's quarterly results.

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