X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Pfizer: Gearing up - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jul 4, 2002

    Pfizer: Gearing up

    Pfizer has reported a marginal rise in net sales (excluding excise) for 1HFY03 ahead of its merger with Parke Davis. This seems mainly on the back of discontinuance of certain non-profitable brands ahead of the merger. The merger ratio has been finalised at 4:9 (i.e. 4 shares of Pfizer for every 9 shares of Parke Davis). Post the merger, Pfizer is expected to be the fifth largest player in the domestic pharma market.

    (Rs m) 1HFY02 1HFY03* % Change
    Sales 1,516 1,532 1.0%
    Other Income 281 323 14.6%
    Expenditure 1,406 1,388 -1.3%
    Operating Profit (EBDIT) 110 144 30.9%
    Operating Profit Margin (%) 7.3% 9.4%
    Interest 2 1 -42.1%
    Depreciation 34 38 11.9%
    Profit before Tax 356 428 20.2%
    Tax 142 157 10.6%
    Profit after Tax/(Loss) 214 270 26.7%
    Net profit margin (%) 14.1% 17.7%  
    No. of Shares (eoy) (m) 23.4 23.4  
    Diluted Earnings per share 18.2 23.1  
    P/E (at current price)   19.6  

    *- 1HFY03- is for the half year ending May'02.

    The company reported a strong 210 basis points rise in operating margins. However, operating margins of the company are still lagging behind its peers. A closer look at the break-up of operating expenses suggest that there could be further improvement in operating margins going forward. While most of the cost heads have reported an improvement, staff costs recorded a rise on the back of integration of the field force of Parke Davis. The integration of the marketing staff of Parke Davis with Pfizer has already taken place.

    1HFY02 Sales
    (Rs m)
    %
    Growth
    Margins
    %*
    Pharma 1,620 4.6% 19.0%
    Animal Healthcare Business 322 8.9% 15.1%
    Services- Clinical Development 56 3.7% 6.4%
    *- Profit before interest and tax
    % of sales 1HFY02 1HFY03
    Raw Materials 25.2% 21.5%
    Purchase of finished goods 9.7% 9.1%
    Staff Costs 16.8% 18.0%
    Administrative and other costs 40.9% 42.8%

    The boost in sales and operating margins seem to be on the back two main reasons. One, the company's 'Corex' range of cough preparations which contribute around 30% to Pfizer's sales are logging 8%-9% growth rates. Further, inspite of strong competition, new products like Magnex and Hepashield are selling at a premium.The merger with Parke Davis is expected to bring down the DPCO coverage of the company to around 19% of turnover against 24% at present. The government is yet to announce the final list of drugs under the new DPCO policy formulated early this year. Becousules (vitamin brand), which would contribute around 12% of the merged entity, is expected to come out of DPCO coverage. Becousules, a Rs 700 m product of Pfizer, is a very strong brand in the vitamin segment. Therefore, the company might be able to implement some price increase on the product.

    More on the merger

    At the current market price of Rs 454, the stock is trading at 16x our FY03 expected earnings on a consolidated basis. The company has set a target of logging double digit growth in topline and 20-25% growth in bottomline. This is on the back of greater focus on profitable brands and integration benefits. The final DPCO list may also act as a trigger for the company's stock price.

    Comparative Valuations
    Particulars CMP
    (Rs)
    P/e-
    03 E
    Mkt. Cap
    (Rs m)
    Mkt.Cap
    /sales (x)
    Aventis Pharma 380 11.3 8,510 1.3
    GSK India 372 18.8 27,814 2.4
    Pfizer Ltd 454 16 13,865 2.4

     

     

    Equitymaster requests your view! Post a comment on "Pfizer: Gearing up". Click here!

      
     

    More Views on News

    Sun Pharma: Bottomline Slips into the Red Amidst Challenging Environment (Quarterly Results Update - Detailed)

    Aug 14, 2017

    A challenging environment and one-time expense pushes Sun Pharma into a loss in the first quarter.

    Lupin: Bigger Challenges or Bigger Margin of Safety? (Quarterly Results Update - Detailed)

    Aug 14, 2017

    GST impact coupled with price erosion in US leads to lower profits for the quarter.

    Dr Reddy's: US Pressure Continues to Haunt (Quarterly Results Update - Detailed)

    Aug 8, 2017

    Profits plunge due to higher raw material costs.

    Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter (Quarterly Results Update - Detailed)

    Jun 23, 2017

    Net Profit lower due to exceptional items in the previous year.

    Sun Pharma: Price Erosion in US Impacts Growth (Quarterly Results Update - Detailed)

    May 30, 2017

    US markets decline while other geographies grow in the quarter.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    PFIZER SHARE PRICE


    Aug 18, 2017 (Close)

    TRACK PFIZER

    PFIZER - ACTAVIS COMPARISON

    Compare Company With Charts

    COMPARE PFIZER WITH

    MARKET STATS